Woman ordered to repay child's transplant fund

Phyllis D. Vaughn, 57, 711 Wendell Ave., was charged with theft of property in excess of $10,000. She and her husband, Charles Norman Vaughn Sr., were in charge of a fund to benefit their grandson, Odell Terry, a teen-aged cystic fibrosis patient.

Although the Vaughns claimed the money has been accounted for, Phyllis Vaughn said Monday that it was in her best interest to enter a guilty plea. In an agreement with the state, Vaughn was placed on judicial diversion, which involves three years of supervised probation and payment of the restitution, court costs and probation supervision fees.

In exchange for Phyllis Vaughn's plea, District Attorney General Phil Bivens announced that he would not prosecute an identical charge against Charles Vaughn, 64.

A hearing to determine the amount of restitution pitted one side of the family against the other. Odell's mother, Lana Terry, tried to convince the judge that her father and stepmother had mishandled the funds. Phyllis Vaughn testified that she'd withdrawn thousands of dollars from the bank account and hidden it in a drawer to keep it safe from Lana Terry. Audience members hurled allegations during a court recess and, in muttered voices declared some of the witnesses "liars."

Judge William B. Acree Jr. of Obion County, who has been handling the case since Judge Lee Moore recused himself, expressed dismay with the testimony, the sloppy accounting procedures and the entire situation. He said neither party had enough credibility with the court.

"I'm not satisfied with any of the players in this lawsuit," the judge said.

The money

More than $33,000 was generated through fund-raisers and deposited into the Odell Terry fund at the former First Tennessee Bank in Dyersburg.

Some of the money was disbursed in checks to specific businesses, and was not questioned.

Lt. Billy Williams of the Dyersburg Police Department's criminal investigations division said he focused on the 16 checks written to Charles Vaughn for a total of $20,950 and the nine checks written to "cash" for a total of $4,290.

Williams said Charles Vaughn referred questions about the checks to his wife. Phyllis Vaughn told Williams that some of the checks were personal loans and that they had all been repaid. But, he said he found no evidence that the loans had been repaid.

Phyllis Vaughn testified Monday that she "didn't put (the funds) back per se in that account." She said the "loans" weren't really loans, but she didn't know what to call them. She said she simply withdrew the money and placed it in a drawer. When Lana Terry needed money, it was retrieved from the drawer.

"There was no really scheme about it," Phyllis Vaughn testified. "I was just trying to put some (money) back all along because I knew it was going to disappear."

Phyllis Vaughn said her husband was so close to his daughter, Lana Terry, that she feared he would capitulate to all of Lana's requests. She said the withdrawals were made to protect the money from Lana Terry, despite the fact that Phyllis and Charles Vaughn were the only persons allowed to make withdrawals.

Phyllis Vaughn said she wrote and endorsed the checks made out to her husband and to cash.

Eventually, the account balance shriveled enough that the bank began charging a $12.50 monthly service fee. Bivens said the service fees eventually claimed $581.50.

After a Dyer County grand jury indicted the Vaughns for theft in December 2005, they placed $5,000 in a trust at the Gates Banking and Trust Co. Both Charles and Phyllis Vaughn said the $5,000 represented the money left in the account and their drawer when Lana Terry contacted the police in 2005.

Lana Terry said she didn't know how much money was in the account or how much had been spent until she tried to buy furniture. The family had returned from a five-month visit in St. Louis and needed to buy furniture for Odell. Terry said she understood the money had been placed in her personal checking account and she purchased the furniture. When her check bounced, Terry confronted her father and learned that the transplant fund was almost empty. Terry said her father and stepmother refused to let her see the bank statements.

Terry reported the situation to the police.

Lana Terry acknowledged that her father gave her cash for trips to the Children's Hospital in St. Louis, Mo. She didn't keep records of how much money she received or spent, so she estimated the totals.

Terry said Charles Vaughn gave her $1,500 for the first weeklong trip in November 2001; another $1,500 to cover 10 two-day trips to St. Louis in the following seven months; $1,000 to help the family move home from St. Louis in February 2005; $150 for another two-day trip to St. Louis in March 2005; $3,000 for appliances; and $6,000 for furniture. The grand total: $13,150.

Bivens noted that the estimated total spent is $12,090 less than amount withdrawn through checks written to Charles Vaughn or to "cash."

Neither Charles nor Phyllis Vaughn kept written records of the money given to Terry. So, they also attempted to compile an estimate. Their listing showed $10,500 for medical trips to St. Louis and Memphis; $6,200 for furniture; and $3,000 for appliances. The grand total: $29,700, or $4,460 more than the Vaughns allegedly withdrew from the account.

Terry said she didn't receive money from her father for trips to Memphis. Her mother, Lawanda Vaughn of Dyersburg, said she drove Lana and Odell Terry to Le Bonheur Children's Medical Center and often bought their meals. If they needed to stay overnight in Memphis, Lana Terry slept in her son's hospital room, Terry and Lawanda Vaughn testified.

The Vaughns' attorney, Edward Chandler of Mountain Home, Ark., later asserted that Lana Terry had received money for her trips to Memphis and merely pocketed the funds.

Accusations abound

Chandler repeatedly attempted to discredit Terry's testimony. In his opening statement and cross-examination, Chandler accused Terry of income tax fraud, food stamp fraud and drug abuse.

Terry addressed the allegations in her testimony.

Unable to work and divorced, Terry said she allowed Lawanda Vaughn to claim Odell Terry as a dependent on her income tax return one year. Vaughn received a larger refund and shared it with her daughter.

Lawanda Vaughn said she paid many of the family's bills and provided many things for Odell Terry. Vaughn said the Internal Revenue Service audited her return and had reported no problems.

Terry said she was receiving food stamp assistance in Tennessee and had some money still available on her assistance card when the family moved to St. Louis in 2004. Terry said her mother used the card to purchase groceries in Dyersburg and brought the groceries to the family in St. Louis.

Terry said she was initially approved for food stamps in St. Louis, but the assistance stopped when the state decided that her housing situation was not permanent. The family was living in Ronald McDonald House apartments made available to persons receiving medical care, she said.

Chandler asked Terry if she remembered writing a bad check for $1,500 worth of crack cocaine. Terry testified that she had been addicted to crack cocaine but she'd completed rehab and was no longer using drugs. After the court hearing, Terry said the incident to which Chandler referred happened 14 years ago and she was never charged with a crime.

Chandler also questioned a number of witnesses, including Terry, about another bank account set up for Odell Terry's benefit at Security Bank in Trimble. The money was to be used for rent at the Ronald McDonald apartments in St. Louis.

Terry said she paid $25 a night for the apartment while Odell was waiting for a double lung transplant. He never received the transplant; he is currently getting good results from an experimental medication, she said during a break in the hearing.

Bank Manager Chasity Norville said Terry wanted to anonymously pay the rent herself. Norville said she called the Ronald McDonald House's toll-free phone number and was told that families don't pay rent to live in the Ronald McDonald House. Norville reported that to Terry's mother and her brother-in-law; the trio who oversaw the Security Bank account.

Terry agreed that families are required to pay to stay in the Ronald McDonald House, but they are assessed a fee to stay in the long-term apartments. She said she paid the rent and had proof of that until her home south of Dyersburg burned on Feb. 13.

Norville said the Security Bank account was closed and the $2,200 balance turned over to Terry.

In his opening statement, Chandler pointed to the confusion over the rent money as proof that Terry was stealing money from her son's accounts. "If she would take this money (from Security Bank) and deny it, she would take this money (from the First Tennessee account) and deny it," Chandler argued.

Norville said she also refused to cash a $1,500 check from a fraternity at an Arkansas college. The check was made out to the Odell Terry transplant fund. Norville said Terry attempted to cash the check. Norville said she couldn't do that because it was an out-of-town check and because it was written to the transplant fund, not to Terry.

The outcome

In his closing remarks, Chandler told Judge Acree that the whole case hinges on the question of who to believe: the Vaughns or Lana Terry.

The judge interrupted him.

"I just told you a minute ago I don't believe either one of them," Acree said. He pointed to Terry's attempt to cash the Arkansas fraternity check, Phyllis Vaughn's decision to hide money in a drawer and Charles Vaughn's lack of credibility in the courtroom.

Chandler said his accounting shows all of the money passing through the First Tennessee account has been used for Odell Terry's benefit. He said the Vaughns owe nothing.

Acree retired to the judge's chambers to sort through the records and consider his opinion. He briefly conferred with Bivens and Chandler and 35 minutes later emerged.

Chandler said he was "extremely disappointed in the manner this (fund) was handled by his mother and his grandparents." Acree said he believed the purchase of furniture and appliances was inappropriate, even if they were used in the boy's home. He said he didn't understand why the transactions were made in cash and why no one kept records.

Acree said he doubted that either side really knew how much money had been spent.

He said the Vaughns removed $25,245 from the fund and, making an adjustment for the dispute over expenditures, said the Vaughns owe $10,950 in restitution. He said $5,000 is to be deposited immediately, referring to the $5,000 now in a trust in the Gates bank.

The rest of the restitution, as well as the court costs and probation fees, are to be paid in monthly installments during the next three years. The funds will be held in a trust by the Circuit Court Clerk's office.

Acree warned Phyllis Vaughn that if she failed to pay the funds or violated the terms of her probation, she would be brought back to court and a new sentencing hearing held.

Acree also told Vaughn that if she had not already made a deal with the district attorney, he never would have placed her on judicial diversion.