Former Vanguard Employee Gets Prison For $2.1M Fraud Scheme

MALVERN, PA — A former employee at Malvern's Vanguard was sentenced to prison after he defrauded the company of about $2.1 million, federal authorities said.

United States Attorney William M. McSwain said Scott Capps, 48, of Coatesville, was sentenced to 48 months’ incarceration, three years’ supervised release, restitution of $2,137,580 and forfeiture of $648,600 for a fraud scheme perpetrated while he was an employee of Vanguard.

On March 14, 2019, the defendant pleaded guilty to all counts in an indictment charging him with conspiracy to commit mail fraud, money laundering, and filing false tax returns.

According to the indictment, between 2011 and 2014, Capps was an employee of Vanguard, an investment management group that managed trillions of dollars in assets for account holders throughout the world.

The defendant admitted that through his employment he had access to dormant accounts that were due for escheatment, which is the process of turning over abandoned funds to the state.

The defendant stole the passwords of subordinates and used those passwords to access the system used to issue checks; he then submitted requests to have checks issued on certain dormant accounts to a co-conspirator.

After depositing the checks into his own account, the co-conspirator issued to Capps checks drawn on one of his accounts.

The total amount of the funds that the defendant stole exceeded $2.1 million.

To Vanguard’s credit, all individual accounts were made whole after the defendant’s crimes were detected. At the guilty plea hearing, Capps also admitted that for the tax years 2013 and 2014, he had filed false tax returns that failed to report the income from his scheme.