Trail hiker pleads guilty to wire fraud in embezzling case

Published 12:00 am Sunday, October 25, 2015

CINCINNATI (AP) — A Kentucky accountant who spent much of six years as a fugitive hiking the Appalachian Trail pleaded guilty Friday to a wire fraud count and agreed to pay back money embezzled in an $8.7 million case.

Federal authorities will drop 74 other counts of wire fraud and money laundering against James T. Hammes under an agreement that includes explaining what happened to the millions diverted from his employer, a Cincinnati-based Pepsi-Cola bottler, in a scheme the FBI said began 17 years ago.

U.S. District Judge Susan J. Dlott accepted the plea after asking him a series of questions, including whether he was pleading guilty because he is, “in fact, guilty.”

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“Yes, I am,” Hammes, 53, replied.

Dlott said she would sentence him after reviewing results of a presentencing investigation that could take several months. She warned him that she could still impose the maximum sentence of 20 years, even though his deal with the government called for less time. He said he understood.

FBI agents arrested Hammes in May at an inn in Damascus, Virginia, during the annual Trail Days festival. The inn’s operator and fellow hikers say he was known by the trail name Bismarck, an affable, bushy-bearded hiker who often appeared in photos and online posts with other hikers along the more than 2,000-mile trail stretching from Georgia to Maine.

Hammes’ hair was long, but his beard was trimmed neatly Friday when he was led into the courtroom, hands and legs shackled and wearing an orange-and-white jail jumpsuit. He told Dlott during questioning that he was taking medication for depression.

He smiled and mouthed greetings to a friend in the courtroom. She refused to talk with a reporter. Hammes also smiled at Ron Vissing, a Lexington man who said he used to play racquetball with him. Vissing said he wanted to learn more about what happened.

“We all assumed he had left the country,” Vissing said of Hammes’ hiker life.

Why he didn’t is among the questions lingering for the family of his late first wife, though her sister, Jane Ryan, of Springfield, Illinois, said they are skeptical of any explanations from Hammes.

“He’s such a liar about everything,” she said Friday by telephone. “Whatever he says is meaningless.”

Ryan is one of four siblings of Joy Johnson, of Waverly, Illinois. Her sister met Hammes when both attended college in Springfield, and they were married with a daughter when Joy died at 40 in 2003 after a fire in their Lexington home.

Lexington firefighters at the time blamed a defective electrical cord and said Hammes had been out walking the dog. There were no charges, but Ryan and other members of Johnson’s family raised questions in 2012 about her death on CNBC’s “American Greed” TV show about the case. Federal agents later reviewed the fire investigation, but nothing came of it.

“This whole thing just seems like a bad dream,” Ryan said. “I hope he gets a lot of years in prison.”

Hammes remarried, but his second wife divorced him after he disappeared.

An assistant U.S. attorney, Emily Glatfelter, told the judge that Hammes agreed to pay $7.68 million in restitution, with $6.68 million going to his former employer and $1 million to its insurer. She said authorities have already seized other money and property from Hammes, including more than $11,000 in cash and gift cards totaling $3,600 he had when he was arrested and $70,000 more in cash found in a Fort Wayne, Indiana, storage unit.

She said he also has agreed to file tax returns from several years when the embezzlement was going on. The prosecutor said Hammes paid more than $2 million in estimated taxes to the Internal Revenue Service, but didn’t file returns every year.

Hammes’ attorney, Zenaida Lockard, an assistant federal public defender, declined to comment after the hearing.

Hammes was called to Cincinnati by his bosses in February 2009 about the missing millions, questioned by the FBI, then disappeared. Hammes, a licensed pilot, had credited a successful investment in a software company for extra money that paid for scuba diving trips to the Caribbean, according to his former in-laws when interviewed for “American Greed.”

The show is credited with leading to Hammes’ arrest: A fellow Appalachian Trail hiker saw the episode and recognized the man he knew as Bismarck. The FBI said Friday that Hammes also used a living person’s identity as an alias while a fugitive. An FBI spokesman declined to identify the person.

Hammes, a Milwaukee native, was the Lexington-based controller for the southern division of G&J Pepsi-Cola Bottlers Inc. The FBI said Hammes created a sham account that played off the name of a G&J vendor, wrote checks to it then moved the deposits into his own accounts.

A message for comment was left Friday with the company.