Alabama Couple Pleads Guilty to Bank Fraud
Douglas W. Scott, 46, and Azar Ardestani, 33, both of New Market, Alabama, pleaded guilty on March 3, 2016, to Bank Fraud and Conspiracy to Commit Bank Fraud, announced David Rivera, U.S. Attorney for the Middle District of Tennessee.
At the plea hearing, Scott and Ardestani admitted using their respective used car businesses in a criminal scheme to defraud multiple vehicle finance lenders, including federally insured financial institutions, automotive finance lenders, and federally insured credit unions. As part of their scheme, they would secure a loan to purchase a vehicle and thereafter seek subsequent, secured automotive loans on the same vehicle from other financial institutions.
The defendants were able to secure additional loans on the same vehicle by agreeing to provide as collateral a “clean” or “clear” title of a vehicle that they had fraudulently obtained. Often, they provided subsequent lenders with copies of false title applications, unfiled tax returns, and other qualifying information, knowing that the lenders expected to receive title to the vehicle to perfect the lien, and knowing that the lender would not have funded the loan as an unsecured loan. Scott and Ardestani guaranteed subsequent lenders that they would be in first secured position and promised to provide the subsequent lenders with the original title to perfect their liens. Instead, they would submit fraudulent information to the Alabama Department of Revenue to “erase” the lien or falsely show that the lien had been paid off.
Because both defendants were authorized dealers in Alabama, they had the authorization to apply for replacement of lost titles, which they did in order to fraudulently release liens and to secure replacement titles that showed no liens on the vehicles, effectively “washing” the vehicle title. In some instances, they would delay submission to the lender of the promised “clean” title in order to collateralize another loan. They also sold lien-encumbered vehicles “out of trust” after obtaining “washed” titles. As an example, the couple obtained nine loans for a single vehicle, each time, falsely assuring the new lender that the vehicle was free of liens. When a financial institution put sufficient pressure on the defendants about getting the promised titles, the defendants would pay off the loans, usually by obtaining additional loans.
Between May 19, 2010 and January 10, 2015, Scott and Ardestani perpetrated this scheme with well over a hundred vehicles and over 65 victim financial institutions, with a total anticipated loss of approximately $5,900,000.
The sentencing hearings are set for June 16, 2016. Pursuant to the plea agreement, Scott and Ardestani face potential sentences of up to 30 years in prison, restitution in the amount of at least $3,800,000 to victims of the crime and a fine to be determined by the Court.
This case was investigated by the Federal Bureau of Investigation. Assistant U.S. Attorney Carrie Daughtrey is prosecuting the case.