By: E&P Staff
The Duluth (Minn.) News Tribune reported today that James M. McGinnis Jr., the former head of Murphy McGinnis Media Inc., will most likely face jail time after pleading guilty to wire fraud earlier this week. The guilty plea was entered as part of an agreement with federal prosecutors after McGinnis admitted he stole $1.7 million from Heartland Publications LLC while he was the company?s CEO.
According to the News Tribune and court documents, McGinnis served as president and CEO of Murphy McGinnis Media Inc. from 1995 to 2003. The company originally published 17 newspapers across the Midwest; that number has since declined due to the purchase of several McGinnis papers by Knight Ridder Inc. After 2003, McGinnis became CEO of Heartland Publications, a newspaper chain based in Florida that produces 28 publications.
When McGinnis left Murphy McGinnis Media in 2003, he owed more than $3 million to both business associates and federal agencies, including the IRS. In an attempt to pay off his debts, McGinnis pilfered money from Heartland?s accounts and forged the bank account statements to cover his theft.
Wachovia Capital Partners and the Wicks Group — Heartland?s investors — eventually grew suspicious of the McGinnis Media group?s financial accountability, the News Tribune reported. McGinnis told the investors that he had fired his CFO, Alan Payne, which was a lie. After backing out of numerous meetings with representatives of the investors, McGinnis was eventually caught when one of the representatives reached Payne by phone and found that Payne was still employed as CFO.
Heartland took McGinnis to court to recoup its losses, and was awarded $5.1 million last year. The group has managed to collect only $1.7 million, since McGinnis? assets are all but gone.
Though his crimes could put him in prison for up to 20 years, McGinnis? plea agreement will have federal prosecutors recommend a reduced sentence of 41 to 51 months. McGinnis will be sentenced within 90 days.