Marlborough Business Owner and Chief Financial Officer Plead Guilty to Bank Fraud Conspiracy
BOSTON – A Marlborough business owner and chief financial officer pleaded guilty today in federal court in Worcester in connection with a scheme to commit bank fraud.
James R. Faro, 61, of Dover, and John J. Crowley, 62, of Boca Raton, Fla., each pleaded guilty to conspiring to commit bank fraud. U.S. District Court Judge Timothy S. Hillman scheduled their sentencings for June 8 and June 13, 2018, respectively. Faro and Crowley were charged by Information in January 2018.
Faro is the former owner and president of Sea Star Seafood Corporation, a company previously headquartered in Marlborough that distributed frozen seafood products. Crowley is the former chief financial officer for Sea Star.
From October 2010 until August 2012, Sea Star maintained an asset-backed loan agreement whereby a bank agreed to loan Sea Star up to $6 million pursuant to a revolving line of credit. Sea Star pledged its assets – most notably its inventory and accounts receivable – as collateral for the loan.
Between November 2010 and August 2012, Faro and Crowley conspired to intentionally overstate the value of Sea Star’s outstanding accounts receivable that it reported to the bank. By doing so, Faro and Crowley fraudulently increased the level of assets against which Sea Star could borrow from the bank. In August 2012, Sea Star informed the bank that it had discovered a “discrepancy” of over $3 million in its reported versus actual assets. Sea Star discontinued its business operations approximately one week later.
The charge of conspiracy to commit bank fraud provides for a sentence of no greater than 30 years in prison, five years of supervised release, and a fine of up to $1 million. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. Assistant U.S. Attorney Greg A. Friedholm of Lelling’s Worcester Branch Office is prosecuting the case.