- Associated Press - Wednesday, June 15, 2016

MISSOULA, Mont. (AP) - The former chief financial officer of Vann’s Inc. pleaded guilty Wednesday to a federal charge that alleges he conspired with the former CEO to defraud the Missoula-based electronics and appliance chain, causing it to file for bankruptcy.

Paul Nisbet acknowledged he knew about and helped George Leslie Manlove charge personal expenses to Vann’s - including nearly $100,000 in college tuition for Manlove to obtain his master’s degree in business administration, along with travel, entertainment and decorating expenses.

Nisbet knew about other financial transactions that should have been reported to the board of directors of the employee-owned company, but did not do so, court records said. One transaction involved Manlove trading $18,750 worth of Vann’s goods and services to a jewelry store owner for diamond earrings and a Rolex watch, prosecutors said.

Prosecutors also allege the men created a corporation to buy property that housed a Vann’s store, then caused Vann’s to make above-market lease payments to pay off the loan. Despite knowledge of Vann’s imminent bankruptcy in 2011, Manlove and Nisbet continued to cause Vann’s to make lease payments to their corporation, JPEG LLC, for a Missoula store that had already closed, prosecutors said. Nisbet personally benefited from $119,250 in lease payments, prosecutors said.

U.S. Magistrate Judge Jeremiah Lynch scheduled Nisbet’s sentencing for Oct. 7 before U.S. District Judge Dana Christensen.

The plea agreement calls for the dismissal of more than 200 other charges - including wire, bank and bankruptcy fraud and money laundering - and for him to pay $122,500 in restitution. Prosecutors said they would not recommend prison time, but the judge is not bound by their sentencing recommendations.

Nisbet has said he can provide substantial assistance to prosecutors, which could make him eligible for a sentence reduction, court records said.

Manlove has pleaded not guilty to more than 200 counts of conspiracy and fraud. His trial is scheduled for October.

In September 2013, the trustee overseeing Vann’s bankruptcy filed a lawsuit against Manlove and Nisbet, arguing their actions drove the company into financial ruin, causing its employee stockholders to lose $9.2 million. The corporation’s insurance company settled for $15.3 million - $7.3 million of which went to the employee stockholders. The rest went to other creditors.

Pete Vann founded the company in 1961. Vann’s at one point had retail stores in several Montana cities but is now defunct.

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