Victim Impact Statement Commonwealth of Virginia Sections 19.2-299.1 and 16-1.273 of the Code of Virginia, allow crime victims to submit to the court a written statement which describes the impact of the crime(s) on the victim and his or her family. Victim Impact Statements may be considered by the court in deciding a sentence. Please complete all parts of this form which apply in this case and add additional pages, as necessary. Defendant: RICK EDDLEMAN Sentencing Date: 7/23/2009 Number: ________________ Name of person completing this form: Relationship to Victim: Name of Victim: Warren Holland Victim (CEO of Decipher Inc.) Warren Holland I. PHYSICAL INJURIES: A. Did the victim have any physical injuries as a result of this crime? (See attached.) B. If yes, describe the physical injuries and medical treatments. (See attached.) II. PSYCHOLOGICAL EFFECTS AND TREATMENT: A. Describe any psychological effects of the crime. (See attached.) B. Describe any psychological treatment received or needed as a result of the crime. (See attached.) III. LIFE CHANGES Please describe any changes in your life as a result of this crime, and any additional information you would like the court to consider about the impact this crime has had on your life, such as changes in personal welfare, lifestyle, or family relationships. (See attached.) IV. ECONOMIC LOSS A. Financial Loss Include a list of property lost as a result of the crime (not expected to be recovered), property damage with attached bills or estimates of repair, medical costs, and other economic losses such as current and future lost wages and income. (See attached.) B. Reimbursement Received Include a list of property insurance, hospital/medical insurance, restitution and other reimbursements recevied as a result of the crime. (See attached.) C. Economic Losses Not Reimbursed (See attached.) Signature of Person Completing Form Date I. Physical Injuries Physical injuries are not limited to violent crimes. As we all know, smoking is not classified as violent behavior, but it obviously causes physical injury to a degree that it kills. Likewise, while embezzlement, manipulation, and cover-up are not considered violent per se, when combined with other behaviors they can potentially cause physical injuries which are quite devastating. My father has a pre-existing heart condition, and has for many years: quadruple bypass surgery, 16 catheterization, 5 stints. (My parents owned 13% of Decipher's stock during much of Eddleman's crime spree.) My father is a man who treated Rick Eddleman like a son. He paid for Rick to have a home when Eddleman filed for personal bankruptcy. He paid for the education of Eddleman's children. He ate dinner with Rick and Teri (Rick's wife / my sister) many times a week and socialized with them regularly with nights out. They spent holidays together and vacationed together. Rick Eddleman befriended my father while secretly and deliberately stealing from him behind his back. It was a monumental betrayal. Rick Eddleman claimed in his own letter of resignation from Decipher (enclosed later in this impact statement) that "overwhelmingly stressful" conditions impacted his life so much that he had to change careers (leaving a job that paid Eddleman over $1 million in salary and bonuses during his employment and enriching Eddleman with many, many millions more via his theft and criminal activities). Eddleman's own writing, while self-serving and manipulative, nonetheless clearly demonstrate that he personally connected stress to life changing events. It would therefore be disingenuous and illogical for Eddleman, having openly expressed that stress impacted his own life so enormously, to not have considered the impact his decade-long theft and betrayal would have on the stress and health of others. Therefore, it is impossible for Eddleman to have not realized that for a victim with a severe heart condition, Eddleman's criminal behavior and utter betrayal could impact that victims health to the point of risking his life. Eddleman's criminal behavior is the textbook definition of depraved indifference. Depraved indifference focuses on the risks created by the defendant’s conduct, not the injuries actually resulting. Every theme park in the world knows not to put a heart patient on a stressful ride. Clearly when a criminal like Bernard Madoff or Rick Eddleman intentionally steal people's life savings, they know they could literally be killing their victims in the process. But, they don't care. Theft on any scale is bad, but theft on such a personal scale and massive financial scale causes physical and emotional injuries to manifest in victims at an alarming rate. While a court may consider that threatening to shoot someone with a gun is more immediately threatening to a victim than taking their life savings, the court must also consider the criminal's knowledge of a victim's condition, the criminal's relationship to the victim, the criminal's disregard for the health and well being of such a victim, and the danger or reasonable danger to the victim. I have more than once witnessed how the betrayal by Eddleman has caused visible changes in my father's health. The fact that this event did not kill him is amazing and little different than threatening to shoot someone and having the bullet misfire. In fact, a criminal with a gun controls the instrument. Rick's criminal acts were worse. He actually played Russian Roulette with my father's life. Eddleman could not be sure the heart-bullet would fire if he pulled the trigger, but he would absolutely know a bullet was in the chamber. Yet, with depraved indifference, Rick Eddleman chose to pull the trigger of these crimes anyway. Rick knew both of my father's heart condition and of my mother's defining love of family. To believe that he could betray them and not effect their health would be naive and criminally negligent. My mother now suffers from depression, including the need for medication never before used in her life, as a direct result of Eddleman's crimes and betrayal. She literally cried at the drop of a hat for five years. I have witnessed the decline in her health from Eddleman's criminal choices. Eddleman tore from her the very fabric of her life. She trusted him. Anyone who thinks that Eddleman's behavior has not taken years off her life is deluding themselves. II. Psychological effects and treatment A. psychological effects of the crime For me to explain the psychological effects of experiencing the enormous number of crimes and methods used by Rick Eddleman, I first must explain the nature of the man. To put his criminal activity into perspective... to give you a "sense" of what he will do... I need to relate a few background stories that define his character. In 1999, on the morning of my beautiful niece Rickell's wedding, a golf outing was organized for about twenty people. Those in attendance included the groom, my Uncle Bo (the Baptist minister presiding over the nuptials that day), Rick Eddleman and many others. One day when I was showing my Uncle Bo a spreadsheet of credit card charges listing some things Rick Eddleman had embezzled, Uncle Bo pointed to one of the charges and said, "I know what that is!" He proceeded to tell me the story of how, outside of the clubhouse, Rick had taken up a cash collection from the participants, approaching $1,000, and then Rick went inside the clubhouse and paid the green fees. Everyone then played golf and came back for the wedding. What the participants didn't know was that Rick had stolen their money. Eddleman paid the bill of $1,035 with his Decipher credit card (embezzling the funds), and he kept everyone else's cash. Rick stole from a Baptist minister, Matt (his soon to be son-in-law), Decipher and others on the day of his daughter's wedding! Another example... In September 1997, Rick Eddleman, Teri Eddleman (Rick's wife), and Kathy Eddleman took a three-week bike trip in Italy. They gushed with joy about the experience. These outward expressions masked the truth. Rick covertly paid for the $4,300 trip by embezzling the funds from Decipher via credit card. In July 1998, Rick and Kathy booked a trip for three with the same travel company (Experienceplus) to Provence, France. They charged the $6,135 payment on Decipher's credit card and Rick again embezzled the funds. A month later, Rick canceled the trip, got Experienceplus to issue a refund check in the names of Rick, Teri, & Kathy Eddleman. Rick then forged the signatures, cashed the check, and kept the money. Here's the refund check supplied by Experienceplus: When this fact and others were brought forth in the civil case (after years of investigation and not a single prior admission by Eddleman of his cover-up), Eddleman was forced to acknowledge his crimes. The above examples demonstrate a clear lack of morals and a brazen behavior by Eddleman over many years. But you also need to understand the nature of Eddleman's manipulations. Decipher was enormously profitable in the early years of Rick's employment. It was very easy for him to hide hundreds of thousands of dollars in embezzlement. But to do so continuously, he had to manipulate the people around him. Such is the case of Eddleman's manipulation of his own accounting staff. Over time, through many tricks, Rick implied to some of his staff that the reason they had jobs was because he shielded them from Cindy and me. In other words, Rick was their hero and we were the bad guys. Once he had built this psychological wall of protection, Rick told our controller that I had given him the right to borrow money from the company. It was a lie, I had not. Rick had already been stealing for two years with checks and he saw this as an opening to steal more. Eddleman constructed a web of lies so our controller would not catch his credit card theft. Once the cards were issued to everyone in the company, it was Rick's job to review and audit the expenses. He immediately started using his own company card for personal items and marked a few of them as personal so our controller wouldn't question the charges. Many of these purchases were recorded in a "suspense" account. It's a holding account until the funds are cleared with a repayment. Thus, Rick projected the appearance of honesty to his subordinates. It was all an act. When the suspense account would get to $50,000 or so (small enough that it would not be material to our outside accountants), Rick would show the controller a personal check in that amount as if he were making a deposit to pay it back. Rick would then destroy the personal check and write-off the suspense account illicitly in small amounts to nearly every general ledger account in the company.... spreading the theft through the entire financial statement and thus only changing numbers in each category by a small fraction of a percent. It was totally undetectable in this form (since Rick Eddleman himself was supposed to be the detector of such fraud) and yet massive amounts of money could be stolen. The next day, the suspense account would be zero, and the controller and others in accounting believed Rick had repaid his "personal" charges. Since Rick also did the bank reconciliations, no one on his staff saw that it was all a lie. Another example... After Rick's crimes came to light, two of our warehouse managers visited me one day to tell me a story of horrible things Rick had said about Cindy and me over the years. The conversation with these employees lasted over an hour, with one recurring theme: Rick repeatedly expressed hatred for us. In the same way he built a psychological wall with his accounting staff, these employees said he had tried to do the same thing at the warehouse. When Rick and I were teenagers. We used to go camping on the islands off North Carolina. On one such trip, Rick and I were out in the water swimming when I got a cramp in one of my legs. As I was pulling myself to shore, I got a cramp in the other leg, and Rick was helping me in. We always told the story to his children about the time Rick saved my life. It was a little family legend of Rick being a hero. The warehouse managers above recounted in detail how Rick told them the story one day at the warehouse, and when he was finished he said, "I wish I never saved him." [Note: hearing of his shocking desire that I be dead, his hatred, and factoring in his criminal behavior, it was at least prudent to consider the possibility that Eddleman could represent a potential physical threat.] Another example of manipulation and lies... In the first three to five years that Rick was working for Decipher, one of his missions was to build an accounting system that could provide realtime information to management. This was 17 years ago, and we were clearly ahead of our time in our industry. Rick had already moved through a few accounting packages (in hindsight, to cover-up his crimes). One project was using a database called 4th Dimension, a Macintosh-based system with great possibilities for us. Rick hired a software engineer by the name of Lincoln Stoller, and we purchased some of Lincoln's unique accounting code. Rick worked on the project with Lincoln for two years. One day Rick told me, "4th Dimension is not working. It's taking too long to develop and we need something much bigger, like PeopleSoft or Oracle." I was disappointed but I nonetheless trusted Rick and I gave him the task of researching software options. He returned, saying we could get "everything we dreamed of with PeopleSoft" for $750,000. That sounded like a lot of money for a company our size and I was hesitant. Rick persisted, and a short time later said, "I've negotiated a really good deal and we have to do this. We can get a complete implementation of Oracle and Oracle financials for $500,000." I approved the budget. After Rick's initial crimes were discovered, I contacted Lincoln. The first thing he said was, "Warren, I was very disappointed that Decipher dropped our software. We were totally finished. You could have monitored every transaction from your desktop." I said, "Rick told me your software wouldn't work." Lincoln said, "Rick told us that higher powers than he wanted a system that had 'big corporation' bells and whistles." It was all a lie by Rick. Lincoln's software was complete. I've seen versions of it since and it not only would have worked, it would have given us an advantage in our industry years before our competitors were even close. However, it also would have enabled me to "see" Rick's criminal activity. So Rick spent half a million dollars unnecessarily, simply so he could continue stealing and hiding his theft. Eddleman then covertly spent almost $5 million on this project (explained later in detail) in one of many efforts to bankrupt the business. Lincoln said, "You know, in hindsight, I could see this. Rick never provided any support for the transition. He kept tight control over the data and never enabled anyone else to learn the new system. It was too bad because (with) me as the lead programmer and him with his engineering degree...." I stopped him. "What engineering degree?" Lincoln said, "The engineering degree Rick told me he had." I said, "Rick doesn't have an engineering degree. He flunked out of Old Dominion University." As of today, Wednesday July 15th, 2009, Eddleman is still lying. He posted his resume on the business website, LinkedIn, at http://www.linkedin.com/pub/rickeddleman/8/338/636. Among other things the resume not only brazenly lists his Decipher position of VP of Finance & IT but his supposed education (a lie) about Old Dominion University. The screen capture below is part of the resume. One would never know the truth of Eddleman's criminal activity from looking at his view of himself. Eddleman claims five years at ODU (implying a graduate degree). In reality, he flunked out about one year into college. Obviously, this is a man who never stops lying, even 40 years after the fact. To really understand Eddleman's slick manipulations, you have to experience his words for yourself. Below is his letter of resignation from Decipher. Consider when you read this that at the date of this letter Eddleman had already clandestinely removed $9 million from the company but had indicated to management that he had "borrowed" $120,000 and intended to pay it back. I'm not a psychiatrist, but I can tell the court what personal experiences I have had with Eddleman over many years and what feelings they evoke. It doesn't take a doctor or a rocket scientist to read the above letter of resignation, knowing the facts we all know today, and realize that Eddleman possesses the classic characteristics of a psychopath: * Criminal versatility * Pathological lying * Pathological narcissism * Superficial charm * Deceitfulness * Manipulativeness * Irresponsibility * Lack of empathy * Lack of remorse * Elevated sense of self-worth * A sense of extreme entitlement * Indifference to, and rationalization of, having hurt and mistreated others Make no mistake, Rick Eddleman knows the difference between right and wrong. He consciously chooses criminal acts to elevate his ego and status in the world. Getting away with it, is a reward in itself. He's also cognizant that for such contrived social status to have credibility, he has to hide his real behavior, so lying becomes the standard operating procedure. Daily. Continuously lying. In a different time, such a person would be called by a more colloquial term than psychopath: a conman. So, what has been the psychological impact of knowing and working with such a person? Many, many people in my life (family, co-workers, friends, etc.), after learning of Eddleman's crimes and behaviors, have expressed concern for my physical safety, believing Rick was capable of anything. There have been times when we have taken protective measures against the possibility that Rick would harm me or others physically. We changed security features at our office (to protect everyone) and I have personally taken protective measures in my home. Do I believe Eddleman is capable of violent acts? While I certainly hope not, the regrettable answer is, yes. Rick Eddleman can be polite and project professionalism, but is actually moody, cold, inwardly angry (at others, not himself), and confidently irrational. He harbors rage and an unbelievable degree of jealousy. (Jealousy is a trait he has possessed visibly all his life.) Eddleman believes that HE is the one being persecuted. That is delusion. It's also very dangerous. Rick Eddleman was raised around abuse and guns. Naturally, that fact alone doesn't make someone dangerous. But when you combine that with other antisocial behaviors, one would be foolish not to consider the possibilities. Now, I want to be clear. While I suspect Rick Eddleman is more like Bernard Madoff than Charles Manson, I'm simply relating that there is nothing that Rick could do now that would surprise me. I can say in all honesty that if a stranger told me Rick Eddleman was heading toward me with a gun, I would believe the stranger. That's unsettling and obviously diminishes the quality of life. My sister called my father a few months ago and said that Rick wanted a gun that he owned which is stored in a self storage unit. That's not a very comforting thing to hear (although naturally my father refused to give it to him). Thus, I have evolved to the point of some concern about the safety of my family and friends. Eddleman is someone who hides behind a mask in every part of his life. To him anything that impacts others is justified and anything that involves taking responsibility himself (to quote from his recent interview), "... is Decipher making good on their full promises… that would be to expose me to the world and to make as much difficulty in my life at this point as they possibly can." That too is delusional. Eddleman blames others for his predicament with this court. I have known Rick since I was thirteen years old. It is very clear that I have been wrong about this man for my entire life. Everyone has. Any man who steals from his own children (his two daughters own 10% of Decipher via a trust I set up for them when I founded the company) is precarious and morally bankrupt. Of course, this criminal case is in the sole control of the court and the Commonwealth Attorney. However, to this day I experience enormous pressure from the underground lobbying of Rick's wife and children to let Rick go (as if Rick did nothing wrong and as if I had control over this court). It is a strange phenomenon that otherwise intelligent and loving people, in dealing with a psychopathic personality close to them, lose all sense of balance and reason. Behaviors they would never accept from anyone else in their life, they expect others to accept and condone from their psychopathic partner or parent. The desire for justice in this case (by everyone I know on the side of Decipher) is not about revenge or anger. I have no need for the universe to extract revenge. Rick Eddleman is master of his own fate. And while I would love restitution, I have no reason to believe, and no evidence to demonstrate, that restitution will occur through any means other than Cindy and me generating other business with the enormous support of our family, friends, employees and business associates. It is the nature of the plea system that this court only sees a fraction of the damages caused by Rick Eddleman. A decade of theft and another eight years of cover-up are all boiled down to a few minutes in court and a few victim impact statements. I could easily write 300 pages and still not tell you everything. The real consequences of Rick Eddleman's crimes have been felt by everyone except Rick Eddleman. Eddleman has committed thousands of felonies and yet he is in front of this court to answer for but a dozen. Not only is this number tiny in comparison to the number of felonies committed, but it is remarkable how criminals like Eddleman frequently evade long-term confinement for decade-long illegal activities which enrich themselves yet destroy the lives of victims who are forced to deal with the negative consequences far longer than the criminals themselves. Don't let that happen in this case. B. Describe any psychological treatment received. There are simply no psychological foundations in the life of most rational people to deal so directly with a man like Eddleman who has no conscience. They don't teach "How to interact with a pathological liar" in elementary school. Behavior like Eddleman's is so deviant that making sense of it all is a difficult journey. In all honesty, I believe that nearly everyone closely associated with Rick Eddleman needs some level of emotional assistance. Not because they are crazy. Specifically because they are not. For example, my mother has been on anti-depressants ever since Rick's true character came to light. I and my business partner constantly deal with the consequences of Rick Eddleman's crimes and manipulations both through therapy and through the sheer strength of being surrounded by friends and associates who want to see us survive. III. Life changes. (personal welfare, lifestyle, or family relationships.) What can one say when a criminal steals 25 years of your life? Rick Eddleman deserves more than 12 years behind bars. When Rick Eddleman departed Decipher, he had taken a company that was totally debt-free for nine years and left the company with massive hidden debts (many our own employees and management team didn't know about) and a negative net worth of millions of dollars. In hindsight, if he had been employed by Decipher just a few months longer, the company would have been bankrupted with zero chance of survival. I have worked for six years without compensation and put all of my personal assets into Decipher to help the company survive. I closed my 401k and gave all the proceeds to the company. I mortgaged my home and gave all of the proceeds to the company. I sold Decipher's office building (which I owned personally) and gave all of the proceeds to the company. Every dime I have, every moment I work, is in service of overcoming the damages caused by Rick Eddleman. Cindy Thornburg has worked many years at a salary 20% of her former income and she has worked over a year without any compensation. A few other employees did the same. Cindy also put many assets at risk, including her only remaining piece of real estate and much of her 401k. My parents have put in funds from the proceeds of the sale of their home in Virginia Beach. In addition, they took out a mortgage on their condo and added some of those funds to the company. Many dozens of our employees lost their jobs and yet still contributed time freely toward the company's survival. Multiple employees have worked for the company on the outside for many, many months without compensation. Some vendors have sacrificed debts. Our lenders have sacrificed enormously in support of a company with a negative net worth. Everyone has paid... except Rick Eddleman. Under any calculation, it would take Rick's wife hundreds of years of working to do nothing but pay Decipher back. She hasn't offered, so I don't expect she is going to spend her life paying the debts of her husband. Under any calculation, if you divide the amount of money Rick Eddleman stole by the number of years he will spend in prison, Rick Eddleman will make more per year than I ever made in my 25 years in business. That is criminal. So, while this court is looking at a dozen felonies, be aware of the magnitude of Rick Eddleman's crimes. They are so massive that they literally destroyed the lives of hundreds of people. Is Eddleman responsible for every dollar the company ever lost? Certainly not. We have had products that worked and products that have not worked. However, there isn't a combined set of any problems the company has ever faced (short of Rick Eddleman's crimes) which $8.9+ million would not have solved in total with many millions to spare. IV. Economic Loss A. Financial Loss For a period of nine years while employed at Decipher Inc. Rick Eddleman secretly committed thousands of acts of embezzlement, forgery, computer fraud, credit card fraud, equipment theft, income tax evasion, failure of fiduciary duties to trusts, the unauthorized procurement of company loans and equipment, criminally receiving goods and services fraudulently, money laundering, failure to file accurate expense reports, conspiracy, submission of false financial statements and financial reports to management and financial institutions, wire fraud, the intentional mismanagement of company assets, and a cover-up that included a vast web of overt lies to employees, management, and family members. Rick started stealing covertly in 1993, only one month after I gave him the authority to sign company checks. To scratch the surface, among many other things, Decipher has discovered over $529,924.66 in check fraud; $493,940.89 in credit card fraud; $41,188.21 for embezzlement checks in the name of Rick's wife; $209,317.72 in trust fraud; over $6 million in covert mismanagement and other criminal activities (including computer fraud), over $1 million in salary and bonuses paid to Rick during the period when he was stealing and covering up his crimes, and much more. Rick stole many millions directly. In addition, he covertly expended millions in company assets in an effort to bankrupt Decipher and thus conceal his crimes. A year or two after the discovery of this cover-up, Decipher wrote off $8,958,984 as a direct result of Rick’s actions. Since that time, we have uncovered more. We also received a civil judgment that currently stands at $9.2 million with interest. But, even that number hardly scratches the surface of the damages. By relating a few stories, you can see why. One of Rick's jobs as our financial vice-president was to manage the company insurance policies. This included the bonding of employees, especially in the accounting department, where large sums of money were handled. In December 1996 in an email to Rick, I said to him, "... cover anyone in the company with access to funds. Bonding is just the prudent thing to do when we have millions floating around." Rick responded, "I'm a step ahead of you on this one... we currently have employee dishonesty insurance coverage... I'll make sure we're all adequately protected." He was lying. Two years later, in December 1998, the issue came up again when a friend related a story to me about someone stealing funds from a charity she ran. I emailed Rick, mentioned the story, and said, "We should include bonding in our insurance as a matter of course for all accounting staff and anyone else with access to bank accounts, customer checks, computer access at the accounting level, managers with access to funds, etc. I don't think we would have anyone steal from Decipher [obviously I didn't know I was writing to the man who had already been stealing for five years], but... Let's have every appropriate employee bonded, or get Decipher coverage that protects the company against this from anyone." Another two years later, in January 2000, an insurance issue occurred with an employee on a different matter and in that email I stated to Rick, "I've asked about this before and been told we had 'total' coverage." Rick responded, "You have asked that we make certain we have employee theft insurance (bonding) and this has been in force for some time." Rick lied. He never bonded accounting employees and specifically never bonded himself. We discovered this lack of insurance at the worst possible time, when we wrote off $8.9+ million in losses because of Rick's crimes. The only insurance coverage we had on point was one tiny clause in the standard language of our general insurance policy. Even that had a time limit of a few years. Rick had intentionally NOT covered the company so we could never recover his theft and by 2001 could not recover from his planned bankruptcy. In other words, Rick planned to take us down regardless. Rick not only intentionally disregarded multiple directions, he lied about them. The irony is, he alone knew what "adequately protected" meant, since he was the dishonest employee from which the company needed insurance protection. If "adequate" coverage had been in place as Rick said, we could have recovered $8.9+ million immediately. If Decipher had gone out of business, it is very unlikely that Rick's crimes would have been discovered. The computer records didn't match the physical checks, but with the company bankrupt, who would be looking? Many crimes were not uncovered until five or six years later when discovery happened in the civil trial. Eddleman covered up everything. To demonstrate the magnitude and how these numbers only scratch the surface, let me relate a few other important facts... Had Rick Eddleman done one thing of honor before his crimes were discovered... simply taken one hour in any management meeting to tell the truth... Decipher could have recovered $4 million in cash for income taxes already paid. This $4 million was not made a part of the civil settlement, but the lost was a direct result of Eddleman's criminal activities, false reports, and cover-up. To put this in perspective, this one item (Eddleman continuing to lie) represents more cash than all the stockholders of Decipher combined have ever taken out of the company in it's entire 25 year history. And all Eddleman had to do was tell the truth. As is always the case in such matters, it was a useless exercise to make every point in the civil case. For example, had Eddleman not lied to management with false financial and inventory reports, a $3 million inventory expenditure would have been averted. That was not made a part of the civil settlement, but these two matters alone would bring the damages to over $16 million. Had Eddleman not lied and created false reports to the city of Norfolk by maintaining assets on the books of Decipher that has already been sold or destroyed, a quarter of a million dollars in local property taxes would have been saved. These taxes were paid by the company because of Rick's manipulations yet discovered after the statue of limitations kept the city from returning all but a tiny fraction of the money. This was not added to the civil settlement. Had Decipher included the time value of money from the occurrence of the crimes, say at the statutory rate of 6% interest, the damages would have exceeded $20 million. Even on the existing judgment, the statutory interest alone is about half a million dollars a year. All this while Eddleman is presently defaulting on $1,000 a month payments in the settlement agreement. Let's go back in time a moment. In early 2001, Decipher didn't know any of the above. We initially discovered about $120,000 in theft. Eddleman told us that he didn't know why he had “borrowed” the money, but that he had documented everything and "intended to pay it back." While we were shocked by the discovery of his covert behavior, we could only surmise at the time that Rick was under intense pressure. Out of concern for Rick’s mental and physical safety, Decipher allowed him to resign, paid him severance, and arranged for and offered to pay for therapy. Still, we confronted him and asked the most obvious question, "Is this all?" Rick said, "Yes. That's everything." He lied. $120,000 was barely 1% of his crimes. Here is a small sampling of Rick's credit card fraud that began in 1995, the first year the company issued cards to employees. Why is this kind of detail important? Because to this day Rick Eddleman is explaining away his crimes by saying, "... I had some difficult financial times." This is, of course, disingenuous. It's simply a smoke screen by Eddleman to wrap a diversion around the crimes without providing a shred of evidence to back up his statement. And even if his statement had any basis in fact, which it doesn't, it would still be zero justification for embezzlement or deception. Thus, it's important that the court see a sampling of what Eddleman was really doing... 1995: Rick stole over $101,000 that year from this ONE method of embezzlement alone. Examples include: Sofas Etc. $1,200.00 Sports Authority $389.41 Murrays Fly Shop $660.81 Hecht's $421.57 Best Western-Radford $141.86 Radford University Bookstore $664.14 Budget Rent A Car $260.79 Barnes & Noble $210.16 Best Western-Radford Sprint Cellular Circuit City Haynes Furniture Ritz Camera Military Circle Gift Rigorno Sunglass Reed Jewelers etc. $145.70 $413.46 $6,038.18 $1,118.15 $342.58 $659.70 $218.38 $825.80 1996: Rick stole over $68,000 in credit card embezzlements including such things as: Seashore Hobby Bike Shop $325.88 Nada Chair $200.26 Mai Ab Roller $27.25 Abercrombie $103.55 Men & Mice $530.00 Seashore Hobby Bike Shop $390.62 Conte's Bike & Fitness $1,039.34 Making Money/Health Tec $1,995.00 Hall Honda-Va Beach $2,982.27 Beecroft & Bull $177.91 Radford University Bookstore $541.33 Barnes & Noble $644.43 Hecht's-Va Beach $742.98 Ticketmaster $321.05 etc. 1997: Rick stole over $107,000 in credit card embezzlements including such things as: Leggett $715.69 Ritz Camera $1,736.54 Suncoast Video $328.92 Circuit City $541.31 Levin's Brass Beds $1,522.32 Beecroft & Bull LTD $1,533.54 1-800-Flowers $83.98 Frederick's of Hollywood $142.45 Trade Your Way To Riches $289.60 Home Quarters $190.35 Best Western Radford $155.86 Radford University $189.70 Frank Gruber MD $375.00 LCT Fine Jewelers $458.96 Decorum furniture $1,250.00 The Atlantic Sands Hotel - Rehoboth $400.14 Experienceplus $3,800.00 Newcastle Motel - Virginia Beach 177.00 Jake Seafood House-Rehoboth Chick's Oyster Bar Alleghany Inn-Radford Lynnhaven Fish House etc. $54.90 $112.65 $85.40 $125.64 1998: Rick stole over $67,000 in credit card embezzlements including such things as: Advanced Answers for Skin $67.93 Bed Bath & Beyond $55.14 BJ's Wholesale $142.56 Store of Knowledge $125.30 Dive Quarters $225.55 Planet Music $100.00 Lynnhaven Dive Center $667.39 Classic Custom Vacations $2,441.97 Godiva Choclatier $95.28 Henry's Raw Bar-Va Beach $240.74 Costal Grill $214.32 Gap $98.20 UNC Bookstore-NC $370.83 Marina Shores LTD $132.65 Midwest Center for Stress $391.80 Lifestyle Homedesign $2,556.50 Honey Bee Golf Club $84.00 Skymall Airline Catalog $332.36 etc. 1999: Rick stole over $72,000 in credit card embezzlements including such things as: Hall Auto Mall $630.30 Lifestyle Homedesign $2,556.50 Geoffrey Beene $365.39 Saks Fifth Avenue $134.81 Suncoast Video $124.28 Blue Ridge Mountain Sports $252.89 Fine Jewelers $282.15 Planet Music $213.57 The Bombay Co. $135.59 Banana Republic $792.58 AAA Tidewater membership $133.00 800-Send-FTD Lfower $90.05 800-Send-FTD Lfower $85.62 THA*Bioslim $30.93 Genesis Media Group $1,695.00 Williams Sonoma $484.88 Fanigs Footwear $652.50 Honey Bee Golf $1,035.00 Nordstrom Hotel Moon Palace GTE Mobile Decorum Patient Choice Inc. The Rowe Showplace-Va Beach Chef Maxwell's Restaurant Edwin Watts Golf Shops Lenscrafter's Peoples Pottery etc. $462.86 $205.04 $208.90 $4,172.61 $148.00 $814.00 $257.81 $585.17 $315.65 $376.20 2000: Rick stole over $69,000 in credit card embezzlements including such things as: Nordstrom $820.33 Tidewater Galleries $2,502.78 FTD.com $128.98 Delta Air - T Eddleman $614.00 The Atlantic Sands Hotel $583.20 One Fish Two Fish-Va Beach $131.08 Foons Rest-Va Beach $63.63 Britt Worldwide $155.00 Baywood Greens $204.00 Polo Factory Store $269.99 Pro Step Inc $314.00 Diamond Men's Wear $916.90 Pargo's-Va Beach $68.37 Y Not Pizza $45.95 Chili's Restaurant-Va Beach $74.79 Max & Erma's $42.55 Lone Star Steakhouse $204.12 Wyndham Myrtle Beach Resort $141.92 Franklin Covey $196.99 Atlas Diner $52.84 Silver Diner-Va Beach $60.14 Denny's $26.25 Lord & Taylor Layettes $84.17 etc. 2001: (Rick worked two months in 2001 before the tip of the iceberg of his crimes started to come to light. In those two months, he stole $11,640.98 through this method alone) including such things as: Davinci Toys $74.14 Hecht's Gadgets $201.66 Old Navy $150.00 Kroger $41.95 Zia Maria-Va Beach $223.25 Cracker Barrel Holiday Inn Coliseum The Bistro-Va Beach David Nygaard Fine Jewelers Lynnhaven Fish House-Va Beach etc. $71.69 $189.00 $218.04 $2,037.75 $168.32 I want to take this opportunity to point out a single item above because I will reference it elsewhere in this impact statement. It is of value to the court because it provides evidence of the fact that the defendant continues to lie, even under oath. When everyone else in the company was conserving cash in 2001, Rick covertly bought his wife an expensive piece of jewelry for Valentine's Day, paid for with stolen funds from Decipher. That's the charge listed above from David Nygaard Fine Jewelers for $2,037.75. I'll come back to that later, but let's move on. To understand the clandestine operation of Eddleman, you need to understand how Rick planned to bankrupt the company. For many years, Rick complained about the level of work he was doing at Decipher. In reality, he was spending an enormous amount of energy executing and covering-up his crimes; but we didn't know that at the time. Rick began the previously mentioned Oracle implementation in mid-1998, a process he indicated would take 3-5 months. In 1999, it was still going on. What I did as a result must have shocked Rick to his core. I offered to lighten his workload by bringing in someone to take over accounting. Rick said he would "start looking for someone," but from that moment on he knew the writing was on the wall. He was going to lose control of accounting. A few years later, I interviewed an executive at one of the Oracle consultants that Rick had hired. He told me that they had recommended a path to Rick that would have installed everything, fully-functional, in 120 days. They had successfully done this at hundreds of other sites, most much larger than Decipher, and most more complex than Decipher. Rick rejected the plan. Instead, he assigned the consultants to tasks like custom programming, inventory, and online stores that kept them out of the financial information flow. The consultant said, "At the time, I thought it was crazy, but Rick was the boss." Rick embarked on a scheme that would bankrupt the company and obscure his crime spree. First, he delayed hiring anyone. While the reasons seemed natural at the time, a year later, he was still "looking for someone." By early 2000, the Oracle implementation was a mess. Of course, we didn't know this was all part of Rick's plan: Oracle had to be a mess for his crimes to remain hidden. In April 2000, still totally in the dark about what Rick was really doing, I said to him in an email, "I'd like to bring in someone at a CFO level to take the controller, accounting and financial controls responsibility. Also, I think it would relieve a lot of pressure by reducing the number of people you have to manage." Rick responded, "I don't wish to lose either position or stature within the company and would like time to think through & voice elements of this path I perceive important to those I currently supervise and similarly those aspects equally important to me. ... In spite of my heart felt dedication and need to contribute to the company's success at the highest level I live instead with feelings of quiet despair that the odds are no longer in my favor. So I appreciate your consideration, notice and concern! (I told Rick "I do not believe they are no longer in your favor. I think you have options to excel.") Rick continued, "I want the recognition that my work has moved the ball uniquely in ways others could not; that my association has made a difference." It was all an act. By this time Rick was not only deep into fresh methods of theft on top of the ones he had been using for years, but he was also deep into spending us out of business. In what must have been jolting to Rick, I called our outside accounting firm and offered the CFO job to the senior partner, a man I had known and respected for a dozen years. He didn't want to leave the firm, but he recommended one of his partners. I interviewed and ultimately hired a man named Walt Eley. It's worth noting that Walt actually was the person who discovered the "tip of the iceberg" of Rick's embezzlement. I brought Walt in very quickly (although it was November before he got the title of CFO). Still, Rick needed time. First he had to try to cover his criminal activities. Second, since the loss of accounting control was inevitable, Rick (trusted employee that he was) took on the role of managing the "transition." Rick said he needed to continue to maintain the old systems and do the unique programming to transition Oracle to a complete implementation. So Walt started part-time which gave Walt an opportunity to close out his client accounts for his former employer. Plus, there were five accounting tools in use at the time: Oracle had been installed for inventory, remnants of 4th Dimension were still in operations, Quicken and Multiledger were used for various tasks, and Excel was used for reporting to management. Rick alone knew all these systems. Training Walt on accounting packages we were eliminating would have been silly. (In hindsight it would have been quite fortunate, but it seemed unnecessary at the time.) At first, Walt focused on accounting tasks like cleaning up daily problems and our Accounts Receivable. Within a very short time, Walt was in every management meeting and we offered him the CFO job. During this time, Rick reported financial information to the management team (which now included Walt) in spreadsheet form as he always had for nine years. In one such report, Rick indicated a particular consulting expense was $100,000, which would have been reasonable, given the overall $500,000 budget. Walt questioned that in a management meeting, because he had just seen a bill from a consultant for about $125,000 or so. Rick said, "That's not right. I'll take care of it. The president of Intelligroup owes us a credit for work they did wrong." Rick followed with an email... "... As of Friday, last week, I negotiated with Intelligroup (the consultant Company) to disengage these consultants as of that date, Friday, September 29th. Effective as of that date, we will no longer have these ongoing consulting expenses. Further, I have arranged with Intelligroup to continue with these consultants "at no charge" for a period not to exceed two (2) additional weeks to allow us to complete the implementation and customization of Oracle's iStore; the internet commerce module we own. Also we will maintain both the DBA (database administrator) and the applications functional support person to insure that these on-line transactions properly interface and behave with our Oracle financial applications as we move to real-time credit card transaction processing." "While you will continue to see them residing in the "garden level" over the next two weeks while we work through the iStore implementation, I wanted you to be apprised of the understanding that we will NOT be charged for their services..." Rick was lying. By the end of November, Intelligroup still had consultants in the basement and the management team asked Rick about it. He responded in writing: “I fully accept responsibility for (1) underestimating the complexity of the iStore implementation with respect to the HTML integration into Oracle and (2) overestimating how quickly it could be done. Given the complexity of the implementation, it is clear that my estimate of two weeks was unrealistic and admit reliance upon equally optimistic projections from Intelligroup. In the future, I will endeavor to be more critical in making these projections and include allowances for the problems and challenges that invariably arise with systems this complex. At the very least, I will keep you better apprised of unforeseen challenges and resource demands on a much more regular basis." "On a related note, we are not being charged for Intelligroup's services on this iStore implementation, however, I am mindful this can't last forever.” Rick was lying. While using phrases like, "I fully accept responsibility," he did nothing of the sort. Instead, he was secretly and intentionally destroying the company from within. By the time Walt and I initiated personal contact with the consultant, we owed Intelligroup more than a quarter of a million dollars just for the time Rick had indicated was free. Their total bill for consulting services: $1.5 million. When I went back in time and reviewed the financial spreadsheet data Rick prepared for management in 2000, he never showed $1.4 million in payments he made covertly to these consultants, as if they never occurred. But that's not all. Another consultant was also paid over $1.2 million. Without the knowledge or consent of management, Rick had signed open-ended contracts with eight consultants (i.e. at $200 per hour) while failing to pay $1.2 million to our printers who were manufacturing cards (which increased the company debt at the same time Rick was draining the company of much-needed cash). While Rick's staff knew about some of these expenses, Rick led them to believe they were authorized. In reality, no one on the management team ever saw or approved these contracts. Only two consultants were part of the $500,000 budget, and that was known, but there were six additional consultants that no one on the management team even knew existed. Rick's own accounting staff didn't know about some of them. The total Rick spent covertly on the software implementation with a budget of $500,000: more than $4.7 million. But, that's not all. In the process of preparing for civil trial, I was personally going through two years of checks by hand when I discovered a ninth consultant who was paid at least $130,000 – completely unknown and hidden from management. We also discovered at least one kickback scheme. From January 1, 1999, to February 28, 2001, Rick paid $50,434.28 in kickbacks to an employee of one of the consultants. I later learned from that particular consultant's employer that they have a strict policy against any employee being paid directly. Decipher had an informal structure, but no one would spend $100,000 without talking about it in a management meeting or via me giving approval in conversations with the appropriate manager. Rick knew this and brought up small items in management meetings all the time for approval. In reality, he only did this to deceive; to make others believe he was conscientious and responsible. We now know this was a charade. For example, Rick once asked for approval in a management meeting for a $7,000 computer monitor. Everyone on the management team said no, we didn't need it. We later found it in Rick's home... purchased with Decipher money. At the same time, Rick was totally silent about millions of dollars he was hiding, spending and stealing. Manipulation and betrayal of the highest order. But that's not all. In this massive scheme to run the company out of cash, Rick covertly drew down millions of dollars in debt from our bank lines of credit that he did not report to management. Decipher used to have $3 million in credit lines that we never used. The company philosophy was that we were totally debt-free. This philosophy was drilled into everyone, and it was something about which we were quite proud. Most of our licenses required us to write advance checks in the $1 million range. At the time, we could afford that and more on our own. The only reason lines of credit even existed was because we had negotiations going on with Hollywood studios all the time. We had big licenses like Star Trek, Star Wars, and Lord of the Rings, and many smaller licenses. I knew it was quite possible that some day we would have a big licensing opportunity or a multi-million-dollar acquisition opportunity where we would need to quickly tap into millions of dollars in cash. The lines of credit existed so that if such an opportunity arose, we were ready. For example, one of the licenses we attempted to get (Harry Potter) cost over $6 million and a re-negotiation for the Star Wars license at one point exceeded that. Because Decipher was debt-free and quite profitable, we had no problem securing these lines of credit and not using them. As a VP, Rick drew down these funds in secret. When a tiny fraction of this was discovered, I removed Rick's authority to make financial decisions. In June 17, 2000, I wrote, "... This constant pattern of failing to communicate and provide financial information is totally unacceptable. ... Until I am comfortable that we actually have accounting controls and Oracle is working, you and Becky are not authorized to make financial decisions of any kind without my approval. That includes who gets paid and when." But, the story gets worse... My June 17th email above was sent to Eddleman (and copied to Cindy). However, Rick never told Becky (our controller) a thing about it so he could continue to manipulate her. She had no idea that he (and she, for that matter) had lost authority to make financial decisions. Four days later, Rick directed her to write a check for nearly a quarter of a million dollars in software. Not only was this unauthorized, but when I saw this check many years later as investigations of Rick's crimes continued, I realized Rick had financed the software without telling the management team. In this way he could build company debts without ever reporting them to management or showing them on financial reports. Yet, the company was inevitability and permanently on the hook for the debts. Yet, it still gets worse. By late June 2000, cash was tight so I put a freeze on all computer and network purchases. By mid-July 2000, I specifically directed Rick to make no loans of any kind without me knowing. On July 25th, Rick covertly purchased an additional $179,356.99 in software. This time he didn't pay for it with a check, rather he financed it with new loans and never reported it as an expense. In November, I heard by chance through the grapevine that Rick was considering purchasing $20,000 in software. I emailed Rick and said, "I have previously indicated that I wanted to be involved in all spending decisions. ... don't make any such purchases." He said, "No problem," that it was just software he had been investigating for more than six months. What he didn't say was that he had already covertly spent $1.2 million after my June 17th email. This included nearly half a million dollars on software between July and November, plus an additional $700,000 on consultants. This $1.2 million did not even include his embezzlements during this same period. In late 2006, I discovered a quarter of a million dollars of this software, hidden, unopened and never used, still in the shrink-wrap. No one imagined Rick was intentionally doing anything like this. Why would he? We were about to find out. As Walt got deeper and deeper into the daily accounting systems, he discovered the "suspense account" which at the time had a balance of about $80,000. Luckily, he took this information to our in-house lawyer, Anthony, instead of our controller (who did not attend management meetings and would have thought Rick had authority). Anthony said, "You have to take this to Warren." Walt responded, "It's probably okay. Rick is his brother-in-law," to which Anthony replied, "No... you have to take this to Warren." They both brought it to me, and I was shocked. I told them Rick was NOT authorized to spend company money on personal items, and we needed to investigate the matter further. A few days later, Walt discovered another $40,000 in unauthorized payments bringing the total to $120,000. Rick was confronted. He said he borrowed it (which was very strange because at the time the company was running out of cash). "Rick, is this all?" he was asked. "Yes. That's everything," he responded. You now know it wasn't everything. With so much money moving around, why couldn't it be seen? For one thing, many millions of dollars were outside funds not from the company operations. This took the form of Rick making illicit loans and creating a hidden debt load with borrowing and purchases never seen in normal business operations. For another, Rick had dozens of schemes happening simultaneously. This diluted the effect of any one method. While a few million dollars a year sounds like a lot at the end, and frankly it was enormous, it was only about 8% of the cash moving through the organization at any given time. Rick had the authority, control and our complete trust. When someone deceives over 100 people daily and the secret manipulator is a person you trust, one rarely has the clairvoyance to see they are intentionally working against the interest of every other employee. Especially when he's acting every day behind a mask of sincerity telling people how hard he is working and how much he cares about the company. I should also point out, if it's not obvious already, that Eddleman was very well paid. The felonies for which Rick Eddleman has been convicted occurred between 1995 and 2001. For these years alone Eddleman's W2 for salary and bonuses were: 1995 1996 1997 1998 1999 2000 2001 $149,583.39 $130,000.08 $123,233.15 $158,308.92 $145,261.62 $146,456.26 $ 33,750.00 (for the portion of the first quarter before leaving) It's important to note that this total is understated since in 1999 alone Eddleman did not report all his bonus income to our outside accountant for inclusion in his W2. Also, Eddleman did not report ANY income from his embezzlements and other criminal activities on his federal or state income tax returns. The fact that every financial report Eddleman ever gave to management was bogus certainly means he was grossly overpaid. B. Reimbursement Received Eddleman has volunteered nothing. Everything obtained has been obtained through legal actions against the defendant and everything obtained has been credited against the civil judgment. We have not received enough funds from Eddleman to pay for even a fraction of the legal fees in the civil case. In fact, we have even given the defendant credit for things that the company did not receive. After Eddleman's crimes were discovered, at the demand of my parents, he and Teri returned some property my parents had given them. Eddleman's counsel asked Decipher to credit this toward the civil judgment settlement and despite the fact that Decipher did not get this property, we granted that request. Eddleman's reimbursement payments in the settlement agreement were to be only $1,000 a month on the entire multi-million dollar judgment. The damage numbers are so large that this issue was immaterial. As evidence of that fact, interest on the judgment has not only offset the credit in total, but brought the current balance of the judgment from $8.9 million before the credit was applied to a total of $9.2 million now after the credit. While we have made such accommodations, granting such things to the defendant does nothing in the end. Eddleman has defaulted multiple times on the civil settlement, and is presently in default. Yet during this time he has had enough funds to take a few road trips with his wife. Remember above when I mentioned expensive jewelry Rick embezzled and gave to his wife? Here's why that is important for the court. In the civil case we have the right to debtor interrogatories to discover any funds hidden by Eddleman and to recover appropriate reimbursements. Eddleman lied under oath in debtor interrogatories. He testified that his wife had disposed of all her jewelry (especially the pieces we had identified that Eddleman had purchased through embezzlement from Decipher). Many months after this testimony, his wife, not knowing what Rick said in the debtor interrogatories, told my mother that she was going to have to sell her jewelry to pay for a lawyer. While Rick is entitled to legal counsel in a criminal matter, he is not entitled to use stolen funds to pay for it. Yet, that is what he is doing. He's also not allowed to lie in debtor interrogatories to keep these assets from Decipher, yet that is what he is doing. Eddleman has no intention of ever paying any substantial restitution to Decipher. He has volunteered absolutely nothing. He has not shown the slightest sign of remorse nor changed his behavior. He has never explained where the money went, never apologized, and never evolved a conscience beyond the con. C. Economic Loss Not Reimbursed. There are multiple methods the court could use to determine this number however any such method would result in the minimum balance being the civil judgment (currently $9.2 million plus interest), or a more realistic valuation of $20 million using exactly the facts disclosed in this impact statement. In discovery from the civil case we discovered well over a million dollars in income tax fraud by Eddleman. So, in reality Eddleman has stolen from everyone in this courtroom. While Cindy and I hope to pay back the many supporters of the company who have sacrificed in time and money, it is not likely that will occur. In truth, Eddleman didn't limit his crimes to Decipher. As the golf outing on my niece's wedding day exemplifies, Eddleman will betray anyone and do whatever irrational thing he deems necessary to cover it up.