Former Boone County business owner indicted for allegedly defrauding clients; pleads not guilty

JEFFERSON CITY, Mo. (KMIZ)

A grand jury indictment alleging $1.5 million in fraud and embezzlement was unsealed Thursday against a Boone County business owner.

Kathryn L. Cunningham, known as Kat, 62, was charged with 38 counts by a grand jury in Jefferson City on Dec. 13 but the indictment was unsealed this week. Cunningham, of Rocheport, was arrested Thursday and had her first court appearance that afternoon, according to a release from the U.S. attorney's office in Jefferson City.

She pleaded not guilty on Thursday. A trial is set for Sept. 25. Cunningham was released with standard conditions.

She is the former owner and CEO of payroll company Moresource, which had about 140 clients when it closed in 2020, according to the release.

The indictment alleges Cunningham embezzled from the payroll account that was held in trust for the company's clients. Cunningham stole about $1.5 million for her personal benefit and to run her company, the U.S. attorney's office says.

Cunningham also illegally used company funds for personal purposes, the release says. The indictment says Cunnigham also fraudulently obtained a guaranteed loan and line of credit from the Small Business Administration. She used the money to cover up her embezzlement multiple times.

She also stopped making timely and accurate filings with the IRS and stopped making regular payments to the IRS on her clients' payroll taxes, the indictment alleges. Cunningham also embezzled from the organization called Abilities for Business, Inc., later known as Mid-Missouri Business Leadership Network, Inc., according to the indictment.

Cunningham is charged with 24 counts of bank fraud, four counts of stealing from an organization that receives federal funds and 10 counts of wire fraud.