Guilty plea in Castleton saga

Ex-finance chief falsified tax forms

GREENVILLE -- The former finance chief for the defunct Castleton Group pleaded guilty Monday to conspiring to defraud the U.S. government.

James O. McLamb Jr. of Raleigh, 41, is the first executive ensnared by federal prosecutors in a tax probe of the former Raleigh human resources company.

Castleton managed payroll, benefits and other functions for more than 100 businesses. In December, it filed for bankruptcy after failing to win a required state license and after disclosure that it owed at least $8 million to the IRS.

Castleton's collapse roiled its clients, and their more than 3,500 employees, who had to line up new providers for service. Many still don't have all issues resolved.

McLamb pleaded guilty to a felony charge of "unlawfully, willfully and knowingly" conspiring to mislead the government by falsifying forms filed with the IRS. Castleton collected money from clients to pay the IRS on clients' behalf, but it didn't forward all of the money as promised.

McLamb's plea was part of a negotiated agreement, and he is cooperating in an investigation that could implicate others.

He spoke little at Monday's hearing before Magistrate Judge David W. Daniel at the federal courthouse in Greenville. He did say that "because of all this, I am suffering from depression" and taking medication.

McLamb could receive five years in prison, a $250,000 fine and three years of supervised release. Sentencing is tentatively scheduled for September.

Daniel released McLamb on $100,000 unsecured bail. He required that McLamb surrender his passport and not leave North Carolina without permission from a federal probation officer.