Former president of NC Board of Funeral Service, business partner sentenced to prison for tax fraud

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WASHINGTON — The former president of the North Carolina Board of Funeral Service and his business partner were sentenced to prison Tuesday for tax fraud, according to a release from the Department of Justice.

Kenneth Dale Stainback, 62, of Burlington, the secretary of McClure Funeral Service, was sentenced to 14 months in prison and three years of supervised release. Stephen Ray Smith, 60, of Mebane, the president of McClure and former president of the North Carolina Board of Funeral Service, was sentenced to six months in prison and three years of supervised release.

Court documents show that Stainback and Smith filed false corporate tax returns for McClure.

In 2004, Stainback, Smith and another co-conspirator began diverting gross receipts from the business and omitting that income from the corporation’s tax returns. From there the two opened a new checking account to divert funds from McClure.

According to court documents, the co-conspirators would then write checks to themselves from the separate account. Stainback opened yet another bank account, this time at a different bank, which he used to embezzle additional funds from the business without the knowledge of his co-conspirators.

They were able to conceal their scheme by deleting and altering invoices in McClure’s accounting system. Documents show the men continued to divert funds from McClure even when they knew the IRS was examining the business.

Both men were ordered to pay $8,000 in fines and nearly $160,000 in restitution to the Internal Revenue Service.