A memoir released earlier this year by Tennessee independent gubernatorial candidate David Hatley reveals his federal fraud conviction, which stemmed from a scheme in which he wrote checks to himself using an old checkbook he said he found in a condominium.
While revealing the federal crime, Hatley’s book does not disclose a second conviction he received that same year after pleading guilty to misdemeanor petit larceny in a Virginia case that began with felony indictments, according to court records obtained by The Tennessee Star.
Lee County, Virginia, court records show Hatley was indicted on two felony charges in October 1998. Hatley was accused of “feloniously and intentionally” obtaining property worth $1,304 from individuals identified as Pam and Rick Fannon by false pretense or token and with the intent to defraud.
The records identify the defendant as David Hatley of Johnson City, Tennessee, where the independent candidate for governor has been a longtime business owner.
That charge cited Virginia Code 18.2-178, which states that a person who obtains money or property by false pretense or token with the intent to defraud is guilty of grand larceny. Hatley was also charged, under Virginia Code 18.2-22, with conspiracy to commit grand larceny. The statute makes conspiracy to commit a felony itself a felony.
At the time, the larceny charge could have landed Hatley up to 20 years in prison, while the conspiracy charge carried a potential 10-year prison sentence, though Virginia law also allows courts the discretion to impose up to 12 months in jail for both offenses.
Despite the severity of the charges, court records provided to The Star show the court dismissed the conspiracy charge, while the remaining felony charge was amended to petit larceny under Virginia Code 18.2-96, a misdemeanor offense.
Records Lee County officials provided to The Star show that Hatley pleaded guilty to the reduced petit larceny charge on August 20, 1999.
By the time Hatley entered the plea, the records show he had already paid restitution to his victims. Hatley received a 30-day jail sentence, which was suspended. He was also sentenced to 12 months of unsupervised probation and to pay court costs.
Hatley’s memoir, Tested in Tennessee, does not mention the Lee County prosecution or his petit larceny conviction, despite the independent gubernatorial candidate devoting substantial attention to his federal financial case.
He specifically described the FBI investigation, his subsequent guilty plea, sentencing process, jail experience, the time he spent in home detention, his probation and supervision period, and the shame he experienced while rebuilding his reputation after serving his sentence.
Hatley claimed that the conditions leading to his federal conviction began in 1996, when he wrote that his tanning machine, swimming pool, pool table, and hot tub business in the Johnson City area was suffering, and that he determined an abandoned checkbook found at a property he rented would serve as an unlikely lifeline.
According to his memoir, Hatley used the other person’s checkbook to write checks to himself, then deposit checks into his bank account, and mentally justified the process as a temporary loan from the bank.
Hatley would then immediately withdraw the funds before his own financial institution could determine whether the check would clear the other person’s bank account, and sell merchandise to customers in order to replace the money “before the bad-check funds were subtracted.”
The independent political candidate wrote that the scheme collapsed when he failed to replace the missing money.
“My little ‘victimless’ financial strategy worked for a few months until I couldn’t keep coming up with the money before the checks would bounce,” wrote Hatley in Tested in Tennessee. “The problem got worse, and the debt grew as sales slowed so I closed my account, at twenty-one thousand in the hole, and opened another one with another local bank.”
Hatley also described an FBI agent confronting him at his Johnson City business about two weeks after he repeated the scheme at a second bank, where he said he withdrew another $17,000, and acknowledged initially lying to the agent before retaining an attorney and later pleading guilty.
According to the memoir, federal prosecutors sought a lengthy sentence, but U.S. District Judge Thomas Gray Hull, who was appointed by former President Ronald Reagan, ultimately sentenced him to one month of federal incarceration, followed by six months of home detention, and five years of supervised probation. Hatley claimed the judge disagreed with the prosecutor’s assessment of his character.
Hatley’s memoir and the Lee County records show the Virginia case remained pending while he served his federal sentence.
Hatley wrote that he reported to the Knox County Detention Center on June 7, 1999, and was released before July 4th, 1999. He said his incarceration was followed by six months of home detention, while the Lee County records obtained by The Star show Hatley did not plead guilty in the Virginia case until August 20, placing the Virginia court appearance during the home-detention period Hatley describes in his memoir.
The available records do not indicate whether Hatley received authorization under his federal supervision to travel to Virginia for the proceeding, and his memoir does not mention the Virginia case.
Hatley’s failure to mention his departure from Tennessee for Virginia during his home confinement sentence is particularly noteworthy, as the candidate specifically describes experiencing intense anxiety after thoughtlessly driving to a Walmart during this period.
“Without thinking, I grabbed my keys and drove the two miles to Walmart. I didn’t even realize what I’d done until I was halfway back home and looked down at my ankle monitor,” wrote Hatley.
He wrote that he promptly reported the incident to his probation officer, who told him there would be “No further action.”
The Star asked the Hatley campaign why the candidate did not disclose his second criminal conviction in Tested in Tennessee, as well as for specifics about Lee County prosecution involving Pam and Rick Fannon, and whether federal authorities, including the judge assigned to his case, were informed of the concurrent Virginia prosecution.
Hatley’s campaign did not respond prior to publication.
Polling data from August found U.S. Senator Marsha Blackburn (R-TN) leading her Democratic Party opponent, Memphis City Councilmember Jerri Green, by 21 points among likely voters.
The polling data included 13 independent candidates, and 7 percent of respondents said they would support a generic independent candidate. Among respondents who preferred an independent candidate over those from either major party, Hatley ranked second to former Lipscomb University professor Lauren Pinkston.
The latest survey to include Hatley and Pinkston was released last month by The Progress Fund, a Democratic political action committee (PAC) supporting Green. That survey found Blackburn leading at 45 percent, followed by Green at 36 percent.
According to the pollsters, 10 percent of respondents supported Hatley, while 2 percent supported Pinkston, and 7 percent were undecided. They reported a 4 percent margin of error.
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Tom Pappert is a 2025 recipient of the Dao Prize and the lead reporter for The Tennessee Star. He also reports for the Star News Network. Follow Tom on X. Email tips to [email protected].
Photo “David Hatley” by David Hatley.
