Article in the Winston-Salem Journal featured attorneys Chris Clifton and Michael Grace.

Attorneys Chris Clifton and Michael Grace were featured in a Winston-Salem Journal article titled "Derwin Montgomery, former member of the N.C. House, gets five years' probation for his fraud conviction as the leader of a local homeless organization."

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Derwin Montgomery, a former member of the N.C. House and the Winston-Salem City Council, was put on five years probation Thursday for his conviction of program fraud at a local homeless organization.

Montgomery, 34, was accused in a federal indictment that he misappropriated $26,299 from the Bethesda Center for the Homeless in Winston-Salem. Montgomery served as the executive director of the Bethesda Center for six years before he resigned in January 2021.

Judge Loretta Biggs of U.S. District Court in Winston-Salem also ordered Montgomery to pay $38,618 in restitution to the Bethesda Center, fined Montgomery $22,270 to pay for his probationary supervision and placed Montgomery on home detention for 120 days.

In addition, Biggs ordered Montgomery to pay a special assessment fee of $100 to the federal court.

Finally, Biggs dismissed 14 counts that alleged that Montgomery defrauded the Bethesda Center.

After Montgomery’s sentencing hearing, Chad Armstrong, the chairman of the Bethesda Center’s board of directors, declined to comment on Montgomery’s sentence.

“This is a very serious matter,” Biggs told Montgomery during his sentencing hearing. “The circumstances of the case are egregious.”

Biggs said Montgomery’s illegal actions happened over several years.

“This was not one mistake,” Biggs said to Montgomery.

Montgomery has many accomplishments in his life for him “to be standing in a federal courtroom in front of a federal judge,” Biggs said.

Biggs said she didn’t want Montgomery to consider that his sentence, which doesn’t include any time in jail or prison, as a “slap on the wrist.”

Montgomery told Biggs that he was sorry and he regretted his actions.

“This is hard,” Montgomery told Biggs. “I regret my actions that brought me here. I ask for your grace in this matter.”

Biggs pointed to Montgomery’s work in the local community during his time as an elected official. Biggs said she was moved by the support he received in 20 letters from local residents who urged Biggs to give Montgomery a probationary sentence.

Michael Grace, one of Montgomery’s attorneys, told Biggs that a member of the Bethesda Center’s board submitted a letter supporting his client.

Joanna McFadden, an assistant U.S. Attorney, told Biggs that she agreed with Montgomery receiving a probationary sentence.

However, being a convicted felon for any U.S. resident “is a significant event,” McFadden said.

“This is a serious case because it involves the abuse of the public trust,” McFadden told Biggs. “Taxpayers in this country should know that their money is being used appropriately by nonprofits who receive federal money.”

In 2020, the Bethesda Center received more than $10,000 in federal assistance from the U.S. Small Business Administration, a federal court document shows.

Grace said that Montgomery understands the ramifications of being a convicted felon.

“His greatest punishment is forfeiting being an elected official,” Grace said to Biggs. “(Montgomery) was left to run this agency. He made some poor decisions.”

From 2018 through 2020, Montgomery converted Bethesda Center money for his personal use, a court document says. Montgomery charged the Bethesda Center for personal expenses that he knew were not related to the homeless shelter.

These expenses included $5,119 related to Montgomery’s travel in 2018-19 and $6,549 for the lease of a GMC Yukon Denali SUV, the document says.

In 2020, Montgomery charged the Bethesda Center about $23,000 that were related to marketing, audio/video contracting and other media services performed by his own company, Uplift Media LLC, according to the document.

The indictment said that the Bethesda Center was charged for services that Uplift Media never performed or was charged with exorbitant fees for Uplift’s services. Uplift Media was defunct between 2018 and 2020.

In addition, Montgomery charged the Bethesda Center about $3,950 in media subscription services and direct payments that benefited a previous business venture, the Winston-Salem Chronicle.

The weekly newspaper serves the Black community.

In 2017, while he was a member of the Winston-Salem City Council, Montgomery and another council member, James Taylor, bought the Winston-Salem Chronicle through a company called Chronicle Media LLC.

The Chronicle was founded in 1974 by Ernie Pitt.

The 15-count indictment alleged Montgomery charged the homeless shelter for a trip to Cancun, Mexico with an unidentified romantic partner; stays at luxury hotels in Los Angeles; Charleston, South Carolina; Washington, D.C. and other cities; and $260 in expenses at a strip club in Las Vegas.

The indictment accused Montgomery of violating Bethesda’s policies that required expenses over $5,000 to be approved by a board member. He avoided the requirement by charging less than $5,000.

Prosecutors said he charged Bethesda for expenses that were either associated with his work as a member of Winston-Salem City Council or for personal reasons. He is accused of justifying the expenses as being for “staff training.” He also said that the lease for the SUV was for “shelter operations.”

Additionally, federal prosecutors allege that Montgomery violated Bethesda policies prohibiting employees from hiring their own company.

Montgomery was 21 and a senior at Winston-Salem State University when he was elected to the city council in 2009. Montgomery was re-elected in 2013 and won a third term in 2016.

When State Rep. Ed Hanes, D-Forsyth, resigned from the N.C. House in 2018, Montgomery was picked as Hanes’ replacement. Montgomery, a Democrat, then defeated Republican Reginald Reid in November 2018 election.

Montgomery ran for his party’s nomination for the 6th Congressional District in 2020. Montgomery finished in fourth place with 12% of the vote in a contest that was won by now-U.S. Rep. Kathy Manning of Greensboro.

After his hearing, Montgomery declined comment on his sentence.

Outside of the Ward Federal Building, Chris Clifton, Montgomery’s other attorney, said, “We appreciate the arrangement that defense had with the government. We think it’s fair to both sides.”

Later on Thursday, Grace’s and Clifton’s law firm released a statement for Montgomery.

“Mr. Montgomery is relieved that the court accepted his plea today,” the statement said. “He has shown great remorse for his actions and appreciates the input of the government in bringing this matter to a close.”

Montgomery “looks forward to working hard to establish his image as a person who has learned from his mistakes and will continue to be a leader in the community,” the statement said.