Federal prosecutors have charged The Castleton Group's former finance chief with conspiracy to defraud the U.S. government in a tax probe that likely will implicate other employees.

James O. McLamb Jr., 41, of Raleigh was charged with "unlawfully, willfully and knowingly" conspiring to mislead the Internal Revenue Service, according to a filing in federal court for the Eastern District of North Carolina.

It is the first criminal charge stemming from the collapse of a Raleigh company that handled some of the most complicated -- and sensitive -- issues of workers' lives.

Castleton, which began in 1997, managed benefits, payroll and other human resources needs for small and mid-size businesses. The company filed for bankruptcy in December after state officials declined to award a necessary license and after disclosure that Castleton owed at least $8 million in back taxes to the U.S. government.

Castleton's demise shook its clients, which included more than 100 businesses that employ more than 3,500 workers. They were left scrambling to find new health-care providers, payroll administrators and other services.

The court filing alleges McLamb, who joined Castleton in 2001, was involved in a tax conspiracy between January 2005 and January 2008. Castleton collected money from its clients to pay taxes on their behalf, but it did not forward the money to the IRS as promised. The filing outlines four instances last year when McLamb filed falsified forms with the IRS.

"Jay has accepted his portion of the responsibility for what happened at Castleton since the very first day. He has never attempted to evade responsibility," his attorney, Joseph B. Cheshire V, said Wednesday.

The charge against him "is part of a negotiated agreement between the government and Mr. McLamb, and he is cooperating with the government in an ongoing investigation into Castleton and its workings."

Castleton ran afoul of the IRS at least one other time during its history, before McLamb joined. Suzanne Clifton, who founded Castleton, blamed other executives for those tax troubles. She has publicly blamed McLamb, who was terminated in November, for the tax issues that ended the company.

But the court filing outlining the charge against McLamb says that he and "others" worked together to defraud the IRS. It does not name the other people, but the court filing suggests that his staff and Clifton were kept in the loop on his actions.

"Mr. McLamb supervised the work of other individuals, known to the United States Attorney, and reported his activities to other employees and owners of Castleton on a regular basis," the filing says.

Thomas Manning, a criminal defense attorney representing Clifton, declined to comment.

The Castleton saga likely will take months, if not longer, to play out. Investigators are having to unwind complex accounting to figure out what happened at what was once among the Triangle's most lauded companies.

McLamb, whose Raleigh home is on the market for $809,900, is scheduled to appear in federal court in New Bern the week of June 2. He faces up to five years in prison, three years' supervised release and a $250,000 fine.

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