CINCINNATI — A Cincinnati bank was defrauded out of millions of dollars in a massive financing scheme that ended with the indictment of 10 people last week, the FBI said.
Federal investigators said a former Illinois motorcycle and recreational vehicle dealer and his accountant, together with eight others, took part in a financing scheme that resulted in about 20 lenders losing more than $56 million.
Authorities said the scheme involved two parts: In one, the owner of the RV dealership is accused of fraudulently obtaining more than $31.3 million in direct financing through five lines of credit from Fifth Third Bank, which is headquartered in Cincinnati.
Fifth Third Bank lost more than $27.1 million in the scheme, the FBI said.
In the second part, individual straw borrowers obtained about 200 fraudulent loans totaling nearly $42.4 million, which resulted in about 18 financial institutions losing more than $29.5 million, the FBI said. At least 62 of these loans were made to eight of the people indicted in this case.
Investigators said all 10 defendants in this case fraudulently obtained money for personal use, which allowed them to have “lavish lifestyles, operate various businesses and make investments.”
“The money they obtained created the false appearance of personal wealth and helped induce the lenders to advance funds more readily due to their misplaced confidence that the defendants had sufficient personal wealth to repay the loans,” the FBI stated in a release.
A federal grand jury indicted 50-year-old Russell S. Ott, of Oswego, Ill., on Wednesday, Aug. 28. Ott owned the dealership at the center of the scheme and was charged with one count each of bank fraud and tax evasion.
Brian McMahon, Ott’s accountant, was charged with one count of bank fraud and two counts of filing false tax returns.
According to the indictment, Ott and McMahon fabricated false personal and business tax documents and financial statements and provided them to Fifth Third Bank, which between May 2007 and October 2008 extended the RV business about $31,368,457 through five different credit lines.
Investigators said Ott later enlisted the other eight defendants in this case as straw borrowers so they could obtain fraudulent loan proceeds to share with Ott.
The eight others involved in this case are:
- Andrew W. Stacy, 51, of Elburn, Ill.
- Scott F. Darville, 48, of Racine, Wis.
- F. Peter Mignin, 63, of Geneva, Ill.
- Kevin D. Hanson, 43, of Louisville, Ky.
- Owen A. Weichel, 48, of Huntington Beach, Calif.
- John Materyn, 50, of Ypsilanti, Mich.
- Jill A. Pluta, 55, of LaPorte, Ind.
- Joan M. Quick, 52, of Walworth, Wis.
Each person indicted in this case was charged with at least one count of bank fraud, and eight of them were also charged with federal tax offenses in the 36-count indictment.
Each count of bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine. Tax evasion carries a maximum penalty of five years in prison and filing a false tax return carries a maximum of three years in prison -- and both carry a maximum fine of $250,000. Failure to file a tax return carries a maximum of a year in prison and a $100,000 fine.