Four Chicago And Suburban Men Indicted In Alleged $1.4 Million Automobile Loan Fraud Scheme
CHICAGO — Four Chicago and area defendants were indicted on federal bank fraud charges for allegedly engaging in a scheme to fraudulently obtain 46 automobile loans totaling approximately $1.4 million without ever intending that the borrowers would purchase the highend luxury cars that they claimed to be buying. As a result, various credit union lenders, Including Great Lakes Credit Union, Pentagon Federal Credit Union, and Sherwin-Williams Credit Union, incurred losses totaling at least $914,000, the charges allege.
One defendant, PRECIOUS W. HOUSE, 47, of Chicago, the president of Rolling Auto, Inc., a Plymouth, Ind., wholesale auto dealership that purported to be selling many of the autos, was arrested today. He pleaded not guilty to five counts of bank fraud and one count making false statements on a loan application, and is scheduled to have a detention hearing at 9:15 a.m. next Tuesday before Magistrate Judge Sidney I. Schenkier in U.S. District Court.
Another defendant, BRIAN K. HUGHES, 41, of Homewood, was arrested Jan. 9 and was ordered detained in federal custody. He was charged with four counts of bank fraud and one count of making false statements on a loan application.
Co-defendants MICHAEL O. TURNER, 44, of Richton Park, who was charged with one count of bank fraud, and KEITH B. FOSTER, 46, of Harvey, who was charged with one count each of bank fraud and making false statements on a loan application, were not arrested and will be arraigned next Tuesday in U.S. District Court.
The six-count indictment was returned by a federal grand jury yesterday and announced today. The indictment also seeks forfeiture of approximately $914,511 from all four defendants.
According to the indictment, between February and November 2013, the defendants fraudulently obtained at least 28 automobile loans of the 46 they fraudulently applied for, and obtained approximately $914,000 of $1.4 million they sought in loan proceeds. They made, and caused others to make, false representations in documents submitted to lenders, including loan applications, vehicle purchase orders, and verifications of employment, concerning the individuals’ income, employment, credit history, intent to use the loan proceeds to purchase automobiles, and the existence of contracts obligating the borrowers to purchase vehicles from House and Rolling Auto.
House, Hughes, and Turner allegedly recruited individuals seeking auto and personal loans and agreed to find loans for them in exchange for a fee of 20 to 30 percent of the loan. Then, they submitted false information in the borrowers’ loan applications, their income, employment, and credit history, as well as their intent to use the loan proceeds to purchase autos from Rolling Auto and other dealerships, and the existence of contracts obligating them to purchase luxury automobiles made by BMW, Chevrolet, Jaguar, Lexus, Mercedes-Benz, Nissan, and Porsche, the indictment alleges.
If the individual borrowers refused to cash checks obtained as part of the scheme, Hughes allegedly threatened them with civil lawsuits and criminal prosecutions. House allegedly deposited the loan proceeds into bank accounts he controlled in Illinois, California, and Georgia.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
The government is being represented by Assistant U.S. Attorney Christopher R. McFadden.
Each count of bank fraud and making false statements on loan applications carries a maximum penalty of 30 years in prison and a $1 million fine, and restitution is mandatory. The Court may impose an alternate fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.