Kentucky data-processing company founder Bill Deaton is fined $1 million

The founder of a data-processing company that employed hundreds of people in Eastern and southern Kentucky has been fined $1 million in a federal fraud case.

Bill D. Deaton, founder of Image Entry Inc., must pay the fine within 30 days, according to a court document.

U.S. District Judge Barbara M.G. Lynn also sentenced Deaton to two years' probation, including a year of that time on home detention. He also must complete 300 hours of community service, according to a court document.

Lynn sentenced Deaton on Nov. 10 in federal court in Dallas.

Deaton was charged in Texas because he allegedly defrauded a company based there, called SourceCorp.

Deaton is in his early 60s and lives in London, according to his attorney. The Owsley County native founded Image Entry in the early 1980s.

Deaton built the company, which provided data-processing services for government agencies and businesses, to employ several hundred workers at offices in London, Booneville and other Kentucky towns.

Deaton sold the company to SourceCorp for $32.8 million in March 2001 but stayed on for a time to run Image Entry as a subsidiary.

Deaton was accused of giving SourceCorp false information on Image Entry's expenses and earnings in order to get a $25 million bonus on the sale, according to court documents.

He was charged in February with conspiracy to commit wire fraud. He pleaded guilty in April.

He repaid the $25 million to SourceCorp, along with $5 million to cover the cost of its internal investigation, and paid the U.S. Securities and Exchange Commission $240,000, according to a court document.

A former Image Entry vice-president, Michael Wayne Sulfridge, pleaded guilty to helping rig the company's books.

He has not been sentenced.

This story was originally published November 16, 2010 at 12:00 AM with the headline "Kentucky data-processing company founder Bill Deaton is fined $1 million."