It Didn’t Stay Here: New Haven embezzlement, then Las Vegas spending

It Didn't Stay Here

Thomas Malone (via LinkedIn)

Thomas Malone of New Haven, Conn. just started serving a two-year federal prison sentence after pleading guilty to embezzling a tad over $1 million from a biotech company there he co-founded and was chief financial officer of. If you are a regular visitor to this space, you probably know already where this post is going.

Yep, he took some of the stolen loot and spent it in Las Vegas, on hotel rooms and who knows what else. Perhaps he was hoping to win back the funds and replace what he had taken. Or maybe he just wanted to have a good time.

Either way, he becomes a candidate for my list It Didn’t Stay Here. The criteria is simple: folks who got in trouble elsewhere for something that happened in Las Vegas (in this case the local spending of ill-gotten loot). It’s a cheeky refutation of that famous Las Vegas Convention and Visitors Bureau marketing slogan, “What Happens Here, Stays Here.”

You can see the list elsewhere on this page. Malone, now 49, is hardly the first on the roster who stole money and hot-footed it to Sin City. Since becoming New To Las Vegas a few years ago, I have been amazed at how so often this town is the bug light for people with such proclivities.

This account is based on a variety of sources. They include official records of the U.S. District Court for the District of Connecticut, press releases from the U.S. Attorney’s  Office there and news accounts in the New Haven Register. I also consulted Malone’s own LinkedIn page, which, perhaps surprisingly, is still online (and, not surprisingly, doesn’t mention his legal problems).

Malone is a well-educated fellow, according to his LinkedIn profile, with undergraduate degrees in physics and economics from Georgia universities and an MBA from the University of Chicago. In 2005 he co-founded Artificial Cell Technologies Inc., which he described as a “biomedical nanotechnology company developing synthetic vaccines based on proprietary designed-polypeptide multilayer nanofilm technology.” For a time he was the CEO until Donald Masters, an industry veteran, was recruited to lead the company and Malone became CFO in 2008.

ACT eventually came to focus on a vaccine for malaria, a notorious worldwide disease, and was successful in raising venture capital funding and $4.1 million in grants from the National Institutes of Health.

But starting in 2012, court documents say, Malone gave himself raises and bonuses without knowledge or permission of the new CEO. By 2016, Malone was paying himself $660,000 a year instead of the $281,000 he was entitled to receive. He also charged personal expenses to company credit cards and wrote checks to himself disguised as bonuses. Masters, the CEO, started uncovering the wrongdoing by accident, looking through payroll records on an unrelated matter when Malone happened to be out of the office.

Malone pleaded guilty in October to four counts of theft from a program involving federal funds. The amount of the embezzlement was put at $1,031,508.07. At Malone’s sentencing in March, according to the New Haven Register, Assistant U.S. Attorney Douglas P. Morabito rattled off a list of expenses he said Malone incurred living beyond his means with the proceeds. Besides $100,000 of hotel rooms in Las Vegas, Chicago, and Miami, they included $14,000 in supplies for a large home aquarium, $72,000 in personal Amazon purchases, thousands on adult entertainment, and $13,000 on a family portrait.

Seeking a reduced sentence, Malone and family members argued that the defendant suffered from childhood bullying, feelings of inadequacy and pressures from domestic matters. U.S. District Judge Janet Bond Arterton scoffed at much of that.

Malone faced a maximum sentence of 10 years in prison. Still, despite a U.S. Probation Office recommendation of 2½ to 3 years, and Morabito’s demand for “a substantial sentence of imprisonment,” Arterton meted our just two years, plus that $1,031,508,07 in restitution and three years of supervised release. Malone started serving his sentence in mid-June at the federal prison in Otisville, NY, about 100 miles west of New Haven. According to the U.S. Bureau of Prisons inmate locator, he is inmate No. 25757-014.

Clearly, Malone is not returning to Las Vegas anytime soon. But you probably knew that, too.

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