Market Logistics, Inc. Executives and Employees Sentenced for Their Roles in a Scheme to Defraud BB&T Bank
RALEIGH – United States Attorney Robert J. Higdon, Jr. announced that yesterday in federal court, MICHAEL G. CALE, 60, of Simpsonville, South Carolina, MICHAEL J. LANDRY, 56, of Simpsonville, South Carolina, MICHAEL R. BRIGEVICH, 60, of Traveler’s Rest, South Carolina, and EDWIN PENA, 61, of Fort Pierce, Florida, were sentenced for their involvement in a scheme to defraud Branch Bank and Trust Company out of more than $5,000,000.00. United States District Judge Timothy M. Cain sentenced CALE to 42 months imprisonment. LANDRY was sentenced to 30 months imprisonment. BRIGEVICH and PENA each received a time-served sentence followed by 5 years of supervised release.
The defendants were executives and employees of Market Logistics, Inc. (MLI), a Greenville, South Carolina-based corporation involved in the arbitrage business. MLI was owned by CALE, who served as the Chief Executive Officer. LANDRY served as the Vice President of Sales, BRIGEVICH served as the Chief Financial Officer, and PENA served as the Accounts Payable Manager.
The evidence at sentencing established that MLI entered into a lending relationship with BB&T. The loan was structured as an asset-backed revolving line of credit, with MLI’s accounts receivable serving as collateral for the loan. Pursuant to the loan agreement, BB&T would loan MLI a maximum amount equal to 85% of MLI’s eligible accounts receivable. MLI was required to prepare and submit reports to BB&T reflecting the accounts receivable balance that qualified as collateral under the loan agreement.
The Defendants concocted and participated in a scheme and artifice to defraud whereby they falsified their accounts receivable balances to increase the amount of funds available through the line of credit. They employed several nefarious accounting methods, including a “lapping scheme,” whereby invoices for sales transactions were listed as accounts receivable and not paid, when in fact they had already been paid. The defendants then misapplied the payments to older invoices. The defendants also created fraudulent sales invoices for sales that never occurred, and listed those false sales as accounts receivable. When the fraud was discovered in August of 2015, MLI’s reported accounts receivable balance was $7.8 million, when in fact only ten invoices totaling approximately $436,324.69 were actually outstanding.
BB&T’s loss exceeded $5 million dollars. Prior to sentencing, the defendants made payments to BB&T totaling $1,412,000. They were ordered to pay restitution for the remaining loss amount of $3,610,260.57.
The Federal Bureau of Investigation conducted the investigation of this case. Assistant United States Attorney Toby W. Lathan represented the United States.