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FORMER TACOMA EXECUTIVE SENTENCED TO PRISON FOR BANK FRAUD
Executive Set up Fraudulent Deals to Make Payroll Using Line of Credit

FOR IMMEDIATE RELEASE
April 28, 2006

PAUL B. LUKE, 50, of Omaha, Nebraska was sentenced to one year in prison, three years of supervised release and $1.2 million in restitution today in U.S. District Court in Tacoma for Bank Fraud. LUKE was Director of Finance, and later Marketing Director, at T&W, a Tacoma corporation in the business of leasing commercial equipment to businesses.

According to court records, in November 1999, LUKE created a sham lease agreement in order to draw more than a million dollars from a line of credit T&W had with Bank of America. The agreement called for an affiliated company, Signature Automotive Group, to sell it’s assets to T&W for $10 and then lease those assets back from T&W for more than $223,000 per month. This sham lease had no economic value but was used to allow T&W to draw funds from its line of credit. The money was then used to pay T&W’s employees. The company later defaulted on the $1.2 million loan. In 2000, T & W declared bankruptcy and went out of business.

In asking for the prison term, prosecutors acknowledged that LUKE “did not personally pocket” the money fraudulently taken from Bank of America. “However, given that he owned approximately one-percent of T&W’s stock...(he) did stand to benefit by keeping the business afloat,” Assistant United States Attorney Arlen Storm wrote to the court.

The case was investigated by the Federal Bureau of Investigation. Assistant United States Attorney Arlen Storm prosecuted the case.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, Western District of Washington at (206) 553-4110.

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