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S ogFlce u.s.DlsT.cour





JAN -'6 225


JUL c. U


' bird M pnpfactun*nm L'r

1057 BillTuckHighway,Suite 239
South Boston,VA 24592



The HonorableJudgeJackson Kiser
United StatesDistrictCourtfortheW estern Division
Danville Division
PO Box 1400
Danville,VA 24543

Reference:Case Num ber:4:15CR00004 Kathryn C.Farley

DearJudge Kiser,

On behalfofthe m anagem entand em ployeesofFirebird M anufacturing,LLC and CherokeeTobacco Co,LLC l

would Iike to tellyou how we have been affected by M rs.Farley'sfinancialcrimes.First,Ietm e explain that
Firebird M anufacturing producesthe tobacco productsand CherokeeTobacco isthe m arketing and sales
com pany.M rs.Farley perpetrated crimesagainstboth entitiesand Iwillreferto them collectively as''the
Com pany''in thisletter.
Byw ay ofbackground,M rs.Farley presentsherselfina very positive nd conidentm annerfittngforthe head
ofacom pany.In my dealingswith hershe demonstrated a deep knowledge ofthe industry,from a regulatory
and operationalperspective.Overtheyearsshe had earned the respectand trustofthe owners,m anagement
and custom ers.From aIloutward appearancesshe wasa successfulbusinesswom an.She had alIofthe answ ers
to practicallyany question.She rose to the position ofPresidentand,asa resultwasdelegated tremendous
authority and responsibilty.

InAugust2013theCompanywasraided bytheAlcoholandTobaccoTaxandTradeBureau(the''U B'').In

Novem ber2013 the U B inform ed usthatifM rs.Farleyw asstillrunningthe Com panyw hen itcom pleted its
auditreview during the nextfew m onthsthey would revoke thetobacco permit,inessence shutting itdown.
Ratherthan firing M rs.Farley,the ownersm oved herto the head ofsalesand asked m e and a new l
y hired
Controllerto step in and runthe operationsand workto determ inethe source ofthe U B'Sconcerns.Atthat
point,itwasnotclearwhatcausedthe raid and whatthe auditreportmay say.
M rs.Farleywasoutwardly appreciative ofcontinuing to workwiththe Com pany butbehind the scenesdid

withemployeesshewouldgo seethem andtellthem lwasIying,justafterherjob,and nottocooperate.This
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m adethe following sixweeksverydifficultto m ake m uch progress.Eventually,inJanuary2014 in a review of

historicalbanktransactionswe started to uncovera numberoflarge paymentsthatdid notseem consistent
with the business.Specifically,paym entsto W ard Burton Enterprisessponsoringa truckin the NASCAR Cam ping

W orldTruckSeriestotalingapproximately$2.5million.Theownershadonlyauthorized$125,000.W hen
confronted,M rs.Farleystatedthatshe understoodthattheownersauthorized$250,000 butshethoughtitwas
a good businessdealto do m ore.She said thatspecificcustom ersalesw ould coverthe difference.Salesto that
specificcustom erw ere inthe thousands notthe m illions.Iplaced M rs.Farley on an adm inistrative Ieave of
absence for30 dayswith no contactwith em ployeesuntilthe m attercould be investigated.She violated the
administrative leave and wasfired Iaterthe sam e weekafternumerousw arnings.Soon,m any paymentsto
herself,herrestaurantand unauthorized wire transfersemerged from the Controller'swork.
W hen she wasfired she wasasked to return assigned Com pany property such ascom pany carsand an phone.
She claimed to have none.Evenw hen confronted w ith evidence she only returned aIIassigned property after

The Controller'sworkuncovered num erousotherunauthorized paym ents.Essentially,the scheme thatshe
mostly used w asto underpaytaxesand feesand then charge paym entsto hersel
finto the taxaccounts.An
exam ple ofthisisw riting acheckto BB&T forthetypicalam ountpaidfora rollofstate excise taxstam psbut
she deposited the checkinto herown account.Thiswasdetected by Iookingatthe endorsementon the back of
the check.Anotherexam ple,wasto pay additionalamountsto herselfthrough the payrollaccountsand then

underdepositingfederalincometaxand401(k)plandeposits,ShealsowiretransferredfundstoTriad Marine
forthe purchase ofa boatand trailerforherselfand directed itto be recorded asan equipmentpurchase.
Num erouspersonalitemswere charged on the Com pany Am erican Expresssuch asherchildrens'tuition,

vacations,Zapposshoesand otherpersonalexpenditures.(PleaseseeExhibit1totheguilty PleaAgreementshe

Theem bezzlementinform ationwas provided to aSpecialAgentofthe VirginiaState Police Bureau ofCrm inal
Investigationsand agentsattherrB.Obviously,thisand otheractionshasIed to the 47 countindictm ntand
ultim atelyto M rs.Farley'sguilty plea.

Asa resultofM rs.Farley'sactions,theCom pany had many dem ands upon itbyvriousstate and federal
agencies.Ithasentered into repaym entplanswith each one.W e have tried to spread the paym entsoutw here
w e could stay in business.W e can only charge ourcustomer'spricesthatare com petitive inthe m arketplaceso
theownersareforgoing profitsin orderto meetthe agreed payments.Austerity measureshave been putin
place thathave created difficultfinancialconditions.First,employm entwas74 em ployeesatthe end of2013

anditisnow 37aftereliminatingthesecondshiftandanentireroutesalesdepartment.The401(k)retirement
pbanwasfunded and term inated.Paid heal
th insurancefordependentsw aselim inated.Unused vacation
paym entswaseliminated.Some Iife insurance planswereterminated.Ourem ployees have suffered greatly.
In sum mary,M rs.Farley used the Com pany as herown personalpiggy bankwithoutregardto how thatwould
afsectanyone else.The employeeshave to endure hardshipsand the debtload created castsa Iong shadow over
theCom pany.Theow nersforego a return on theirinvestment.Itwilltakefifteenyearsto pay os the debt,at

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M rs.Farley hasalso been indicted on otherfinancialcrimesin HalifaxCounty,Virginia.Thesewere com m itted

afterthe Federalindictm ent.She goesto trialonJanuary 21,2016 afterm ultiple Iowercourtcontnuances.

Mrs.Farleypledto fourcountsofthefortysevencountsforwhichthegrandjuryindicted her.Inmyopinionshe

isguiltyofaIIfortyseven.W henyoureadtheindictmentmanyofthecountsarethesamecrimesjustoccurring
atdifferenttim es.The reductionfrom 47 to 4 countsisa 91% reduction.There isno reason to give heranything
buta fullsentenceforthe4 counts,she already made herdeal.Ibelieve the em ployees,customers,regulators

and ownersdeseryethisjustice.
Thankyou forthe opportunity to provide the Com pany'sperspective.



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