OFFICE OF THE UNITED STATES ATTORNEY
WESTERN DISTRICT OF MISSOURI
MATT J. WHITWORTH
Contact Don Ledford, Public Affairs ● (816) 426-4220 ● 400 East Ninth Street, Room 5510 ● Kansas City, MO 64106
MAY 20, 2009
FOR IMMEDIATE RELEASE
FORMER CAMDENDTON CAR DEALERSHIP OWNER
SENTENCED FOR MONEY LAUNDERING
KANSAS CITY, Mo. – Matt J. Whitworth, Acting United States Attorney for the Western District of Missouri, announced that the former owner of a car dealership in Camdendton, Mo., was sentenced in federal court today for laundering the proceeds of check kiting and bank fraud schemes.
Michael T. Shepherd, 49, of Camdenton, was sentenced by U.S. District Judge Nanette K. Laughrey this afternoon to three years and four months in federal prison without parole. The court also ordered Shepherd to pay $2,103,998 in restitution, which includes $27,258 in restitution to former employees for IRA plan contributions.
Shepherd acquired the Chrysler Dodge dealership in Camdenton in January 1995. In early 2003, Shepherd expanded the Dodge dealership to include a truck repair business called Mike Shepherd Truck Center. Shepherd sold the Camdenton dealership in December 2005 but continued to own and operate Mike Shepherd Truck Center, which ceased operation in February 2007.
On Dec. 16, 2008, Shepherd pleaded guilty to money laundering. Shepherd admitted that, from as early as 2002 until at least July 27, 2005, he was actively involved in a traditional check kiting scheme in which he kited hundreds of non-sufficient funds checks between multiple banks. In July 2005, Shepherd also became involved in money laundering by using proceeds from a bank fraud scheme to further his check kiting scheme.
In July 2005 Shepherd had an established commercial floorplan loan for Michael Shepherd Chrysler Dodge at Central Bank in Jefferson City, Mo. A floorplan loan is a line of credit at a bank in which each loan advance is made against a specific vehicle. As each vehicle is sold by the dealer, the loan advance against that collateral is to be repaid. On July 7, 2005, Shepherd applied for and received a second floorplan loan at Great Southern Bank in Springfield, Mo., in which he obtained a line of credit of $2.5 million. From July 11 to July 18, 2005, Shepherd submitted 11 floorplan advance requests to Great Southern Bank on this line of credit. In each of these requests, he used as collateral, vehicles already encumbered on the Central Bank floorplan loan in violation of the Great Southern Bank floorplan contract. In each of the 11 floorplan advance requests, Shepherd provided copies of the certificate of titles and signed guarantees of titles, which fraudulently purported the listed vehicles to be unencumbered. Shepherd never disclosed to Great Southern Bank that many of the vehicles were also listed as unencumbered collateral in the floorplan loan at Central Bank. Shepherd committed bank fraud each time he submitted the eleven floorplan advance requests to Great Southern Bank, which totaled $1,813,600.
For example, on July 12, 2005, Shepherd fraudulently applied for $92,000 from Great Southern Bank’s line of credit using vehicles that were already encumbered at Central Bank. Great Southern Bank deposited $92,000 from the floorplan line of credit into The Shepherd Companies, Inc., business account at Great Southern Bank. The specific money laundering charge to which Shepherd pleaded guilty involves his conduct on the following day, when Shepherd began laundering the proceeds of the bank fraud in his ongoing check kiting scheme.
The Federal Bureau of Investigation prepared a check kite analysis report for Shepherd’s financial activity. Although six banks were utilized in the check kite scheme, this report reviewed bank records from only two banks involved in the scheme, First Community Bank and Community Bank of the Ozarks, from April 1 through June 30, 2005. During the three-month period, the analysis revealed a total of nearly $154 million was deposited into the two accounts. Of this total, nearly $131 million, or 85 percent, consisted of checks drawn against one of the two accounts, in furtherance of the check kite scheme. The combined actual balances (daily bank balance minus checks in float) of the accounts were continually negative, revealing an overdraft. At the end of the analyzed time period, the combined actual balance was a negative $5,552,915.
Although the check kite analysis only focused on banking activity within a three-month period, Shepherd’s check kiting scheme began as early as 2002 and continued until at least July 27, 2005.
This case was prosecuted by First Assistant U.S. Attorney Roseann Ketchmark. It was investigated by IRS-Criminal Investigation, the Federal Bureau of Investigation and the U.S. Department of Labor.
This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available on-line at