PITTSBURGH—The former chief executive of a western Pennsylvania medical billing and staffing firm has pleaded guilty to securities fraud and tax evasion in a scheme that cost shareholders about $41 million.

Federal prosecutors initially claimed the scheme by 38-year-old Richard McDonald, of Leechburg, caused a $200 million loss to World Health Alternatives investors, but they agreed to the $41 million figure at his guilty plea Friday to wire, securities and records-keeping fraud, payroll and income tax evasion charges.

McDonald resigned just before the firm filed Chapter 11 in 2005.

He'll be sentenced Aug. 17 on charges that he siphoned money from the company, manipulated records to hide $2.3 million in unpaid payroll taxes, and fudged records overstating loans he made to the company as well as financial statements used to fool auditors and shareholders.