For months Pam Johnson and her neighbors watched in awe as the newest house in their Northwest Side neighborhood went up.
One of the rooms was so huge, they thought it might be a ballroom.
As it turns out, it was a 14-car garage, complete with a special bay window and a sports bar.
"We joked around that our house could fit into the garage, or at least a portion of it," Johnson said.
The Johnsons never met their new neighbor though, nor will they.
On Thursday, Frank Kolk, 49, pleaded guilty to mail fraud, bank fraud, money-laundering and income-tax evasion in Tucson's U.S. District Court.
The Tucson resident also forfeited the $855,000 home near North Thornydale Road, $147,000, two Porsches, one 1969 Ford Shelby Mustang, five other cars and a trailer.
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Originally facing up to 30 years in prison on the bank-fraud count alone, Kolk is facing between 41 months and 105 months in a federal prison.
According to his 16-page plea agreement and court testimony, Kolk stole $1.7 million from the Tucson-based NCH Corp. between 2000 and 2003.
NCH is a real-estate development company that also operates commercial franchises, including Golden Corral restaurants.
Kolk was put in charge of NCH's accounting and record-keeping for several Golden Corrals. He also ended up managing several of the restaurants.
According to the plea agreement, a joint IRS and FBI investigation revealed:
● Kolk wrote additional paychecks to himself, maintaining sole custody of the books to hide his misdeeds.
● Kolk loaned NCH $295,000, but then repaid himself in the amount of $777,000 using several bank accounts.
● Kolk diverted vendors' checks made payable to Golden Corral or NCH to a bank account listed under the name of Golden Corral K-2, LCC that was actually his bank account.
● Kolk used NCH bank accounts to make car payments and to pay for Porsche repairs.
● Kolk created on paper an employee for a Yuma Golden Corral and arranged to be paid that person's salary.
● Kolk manipulated the books of Golden Corrals in Yuma, Sierra Vista, Edmond, Okla., and El Centro, Calif., to make it appear as though they were either losing money or not making as much as NCH would have liked.
Kolk also admitted he was able to take out a $70,000 loan for a Porsche from a Kingman bank by falsely claiming he grossed more than $220,000 a year and that he had thousands of shares of Intel and SBC stock.
According to the plea agreement, Kolk also failed to claim any of the money he stole from NCH — which totaled between $146,000 and $874,000 per year —on his income-tax returns.
In addition, Kolk lied to an IRS agent saying a New Mexico tax preparer prepared his 2003 tax return when it hadn't been filed and that tax preparer had died in 1999.
IRS Special Agent Brian Watson said the Kolk case serves as a reminder to small-business owners to make sure they have internal controls. The person who writes the checks should never be the person who opens the bank statements, Watson said.
Having one person in charge can not only lead to mistakes, but "temptation and fraud," Watson said.
The plea agreement calls for Kolk to serve time, but it also stipulates that he must pay $2.5 million to NCH and pay the IRS back taxes. The seized property will go toward his debt, but he has also been ordered to sell his interests in nine Golden Corral restaurants to help make restitution.
Kolk and his attorney, A. Bates Butler III, would not comment after Thursday's hearing.
Kolk is scheduled to be sentenced Aug. 14 by U.S. District Judge Raner Collins.
U.S. Magistrate Judge Charles Pyle agreed to release Kolk on his own recognizance until that time, after Assistant U.S. Attorney Reese Bostwick voiced no objection.
Bostwick noted that Kolk has surrendered his passport to Butler.
