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May 14, 2010

ELEVEN INDICTED IN MULTI-MILLION DOLLAR AUTOMOBILE LOAN FRAUD SCHEME

(HOUSTON) – Eleven individuals have been charged in a multi-count indictment for their alleged role in an automobile loan fraud scheme that resulted in millions of dollar losses to lenders, United States Attorney José Angel Moreno announced today. 

Richard Wesley Lansdale Jr., 47, of Spring, Texas; Dominic Martinez Dominguez, 36, Alejandro Antonio Barragan, 38, Edgar R. Barragan, 34, Patrick James Batiste, 45, Darick Wayne Coleman, 40, Charles Leonard Turk, 46, and James Eugene Pashia, 51, all of Houston; Paul DeWayne Hamman, 62, of Cleveland, Texas, Kenneth Lee Washington, 33, of Tomball, Texas, and Jason Wade Flanagan, 36, of Cypress, Texas, are charged with conspiring to devise a scheme to defraud federally insured lenders of $7.1 million in auto loan proceeds in a 29-count indictment returned by a Houston grand jury on May 11, 2010.

As of noon today, five of the eleven defendants have been arrested and are expected to make their initial appearance before a U.S. Magistrate Judge later today. Efforts continued to execute the warrants which remain outstanding for the arrest of the remaining six defendants.

According to allegations in the indictment, Lansdale and Dominguez were the president and finance manager, respectively, of two local automobile dealerships - Northwest Suzuki Inc. and Northwest Pre-Owned Inc., while  Turk,  Batiste, Coleman, Hamman and Washington were all employed as salesmen at the same dealerships. Alejandro Barragan owned and operated “AABBS,” with his brother Edgar R. Barragan. AABBS offices were located in Houston and Pasadena, Texas. Pashia was an independent contractor/agent of Farmers Insurance Group and owned and operated Pashia Insurance Agency located in Houston, while Flanagan owned and operated Direct Insurance Agency in Cypress, Texas.

From May 1, 2005, through May 28, 2009, the defendants allegedly conspired with one another to commit loan application fraud, bank fraud, wire fraud, mail fraud and aggravated identity theft by submitting approximately 507 loan applications to purchase automobiles for customers who were uncreditworthy and who could not otherwise qualify to buy the vehicles. Lansdale and Dominguez allegedly recruited Alejandro and Edgar Barragan and others to provide false employment and income information about customers who did not work at those companies and did not earn the amount of income listed in the loan applications.

The dealership salesmen allegedly coached customers to tell prospective lenders the false names of the companies and the false income amounts when financial institutions would call to verify this information. According to the indictment, the defendants electronically submitted the applications containing the materially false information to approximately 19 different financial institutions located throughout the United States. The loan applications, according to the indictment, contained false employment and income information, fraudulently inflated the value of automobiles and overstated the condition of the automobiles. The financial institutions unwittingly funded approximately $7,190,969.68 in loans to the dealerships. Of these loans approximately 347 defaulted, resulting in approximately $4,112,972.51 in actual cash losses to the financial institutions.

The indictment alleges Pashia and Flanagan, also recruited by Lansdale and Dominguez, permitted their respective insurance companies to be falsely listed as the place of employment for customers and falsely verified employment of the customer when the financial institutions would call. Pashia and Flanagan also wrote insurance policies on the loan applications that were submitted to the financial institutions for funding.

A conviction for any one of the loan fraud or bank fraud, wire fraud or mail fraud counts carries a maximum sentence of 30 years of imprisonment, without parole, and substantial fines. The conspiracy charge carries a maximum penalty of five years imprisonment, without parole, and a $250,000 fine, upon conviction. The indictment also seeks to forfeit from each defendant their interest in undisclosed assets totaling $7.1 million constituting the proceeds of the allegedly fraudulent scheme.

After receiving complaints of fraud from lenders, the United States Secret Service, Houston Area Fraud Task Force and the Jersey Village Police Department investigated the case. The case is being prosecuted by Assistant United States Attorney Quincy L. Ollison.

This indictment is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.


Financial Fraud Taskforce Lgo


An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless and until convicted through due process of law.

 

Update: As of 3:00 p.m., nine of the 11 charged are in federal custody and are currently appearing in federal court. Warrants remain outstanding for the two remaining defendants charged:  Charles Leonard Turk, 46, and James Eugene Pashia, 51, both of Houston.

 

 

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