On June 6, 2017 in Moore County Superior Court, former Pinehurst attorney Lu Pendleton “Penny” Hayes entered pleas of guilty to two counts of felony embezzlement in excess of $100,000.00, three counts of felony embezzlement and two counts of felony obtaining property by false pretenses. The charges arose from Hayes’ work as an attorney after it was discovered by a client that funds held in trust by the Defendant were missing. Hayes surrendered her license to the North Carolina State Bar in October of 2014. District Attorney Maureen Krueger contacted the North Carolina State Bureau of Investigation and requested an investigation into Hayes’ conduct. At the conclusion of the investigation, Hayes was indicted on November 17, 2015.
Under North Carolina law, the minimum presumptive punishment for felony embezzlement in excess of $100,000.00 is an active term of imprisonment of 58-82 months.
After the entry of Hayes’ guilty pleas, a sentencing hearing was conducted by the Superior Court Judge Mary Ann Tally. Assistant District Attorney Craig Slagle presented evidence that Hayes victimized numerous clients and the total amount of funds embezzled exceeded $600,000.00. Slagle presented evidence that Hayes had not paid restitution to any of the victims. However, The North Carolina State Bar paid restitution in the amount of $160,000.00 from its Client Security Fund. Slagle asked the Judge to sentence Hayes to two consecutive prison terms of 58-82 months.
On June 7th, over the State’s objection, Judge Tally determined that “Extraordinary Mitigation” existed that justified a probationary sentence instead of the presumptive active sentence. Tally found that the defendant’s “good standing in the community” justified deviation from the mandatory active sentence. Judge Tally sentenced Hayes to 58 months minimum to 82 months maximum in the Department of Corrections, and then suspended that sentence and placed Hayes on probation for thirty six months. As part of her probation, Hayes will have to serve a split sentence of twenty months in prison. Judge Tally ordered Hayes to pay restitution in the amount of $449,564.00, but she specifically denied restitution to the North Carolina State Bar. Judge Tally allowed the defendant’s request to delay her report date to prison until June 26th.
The State has given notice of appeal to the North Carolina Court of Appeals as to the sentence imposed on the basis that the Judge incorrectly made a finding of “Extraordinary Mitigation”.