The former chief financial officer of Soundpath Health was sentenced on June 30 in U.S. District Court in Seattle to a year and a day in prison for embezzling more than $631,000 from his employer, announced U.S. Attorney Annette L. Hayes.

The embezzlement was part of a complex wire fraud scheme that 58-year-old Zachary Augustus Smulski used in an attempt to fund his own start-up companies. When the Comptroller at Soundpath Health discovered that Smulski had hidden company funds, Smulski transferred the money to Soundpath and left the company. Smulski paid $29,514 in restitution. U.S. District Judge Robert S. Lasnik imposed three years of supervised release to follow prison and told Smulski, “it was a crime done for selfish reasons.”

According to records filed in the case, Smulski was hired as the CFO of Soundpath Health in 2008. In 2011, in order to improve the company’s cash reserves, Smulski initiated a leaseback program which should have put cash on the company balance sheet. However, Smulski diverted funds received under the program to accounts he established for a start-up company he was developing.

While he passed some of the funding back to Soundpath Health, he retained $631,500 for his personal business endeavors and used fake accounting documents to conceal the embezzlement. It was only after the Soundpath Health Comptroller started questioning some of the financial records in the midst of a state audit, that Smulski suddenly delivered a check from the start-up account to Soundpath Health to repay the $631,500. Smulski had used more than $20,000 of Soundpath Health’s money to pay business expenses of his start-up.

The case was investigated by the U.S. Department of Health and Human Services — Office of Inspector General and the FBI. The case is being prosecuted by Assistant United States Attorney Francis Franze-Nakamura.