Former Owner & CFO Of Auto Masters Indicted In Multi-Million Dollar Bank Fraud Scheme
Company Fraudulently Obtained Over $24 Million by Overstating Collateral
NASHVILLE – A 21-count indictment, unsealed today, charges the former owner and the former Chief Financial Officer of Auto Masters with conspiracy to commit bank fraud and other charges related to a multi-million-dollar scheme to defraud financial institutions, announced U.S. Attorney Mark H. Wildasin for the Middle District of Tennessee.
Mahan (Mark) Janbakhsh, 47, of Brentwood, Tennessee, and Steven L. Piper, 51, of Joelton, Tennessee, were indicted on Monday and arrested earlier today by FBI agents. Both will appear before a U.S. Magistrate Judge in Nashville later today.
The indictment charges Janbakhsh and Piper with conspiring to defraud Capital One and First Tennessee Bank (now First Horizon); five counts of defrauding these financial institutions; five counts of making false statements and over-valuing property and securities for the purpose of influencing these financial institutions; and three counts of making false representations during official proceedings. Other counts in the indictment charge both defendants with making false statements under oath. Additionally, the indictment charges Janbakhsh with witness tampering and charges Piper with three counts of filing false tax returns.
According to the indictment, Janbakhsh was the majority owner and CEO of America’s United Financial, LLC, and Affiliates, a business that was made up of nine used car dealerships and six related finance companies located in and around Nashville, Tennessee (collectively referred to as Auto Masters). Additionally, Janbakhsh owned other automobile, radio, and real estate related businesses, including Plaza Mariachi, which is an entertainment center and market in South Nashville.
Piper was a Certified Public Accountant and was the Chief Financial Officer of all the Auto Masters entities and prepared the tax returns for Auto Masters and for Janbakhsh personally.
The dealerships sold used cars and provided car loans in connection with those sales. The car loans were then sold to the related Auto Masters finance companies which operated using a line of credit with Capital One and First Tennessee Bank. In order to continue operating with the line of credit, Auto Masters was required to submit monthly borrowing base certificates to report the total value of eligible loans, which formed the collateral for the line of credit.
On October 9, 2017, Piper submitted a borrowing base certificate to Capital One for the period ending September 31, 2017, disclosing that Auto Masters had overstated its collateral by over $33 million. In the certificate, Auto Masters admitted that it had drawn over $26.4 million more than it was permitted to draw under the terms of the line of credit. The following week, Auto Masters filed for bankruptcy. During the bankruptcy proceedings, Capital One sought to depose the loan portfolio and collection manager for Auto Masters, but were unable to do so, as he had left the jurisdiction. The bankruptcy receiver determined that as of July 31, 2017, Auto Masters had overstated its collateral by nearly $37 million, and had drawn over $24 million more than Auto Masters was permitted to draw.
The indictment alleges that Janbakhsh, Piper, and others, manipulated the financial database of Auto Masters and caused false reports to be sent to Capital One to make it appear as though there was more collateral than there actually was. The database manipulation included making false entries to make delinquent loans appear current, and creating false loans based on duplicate Vehicle Identification Numbers, vehicles that had been repossessed, vehicles that had been paid off, and using information from customers who had applied for loans but had been rejected.
The indictment alleges that Janbakhsh and Piper falsely testified during bankruptcy proceedings that they had no knowledge of anyone reporting false information to the lenders and were not involved in the fraudulent scheme.
The indictment also alleges that Janbakhsh engaged in witness tampering with the intent to hinder the federal investigation when he gave the former Auto Masters portfolio manager a cash payment of $10,000 and promised him an additional sum of approximately $300,000 if he would leave the jurisdiction to prevent him from providing information about the fraud to federal agents.
Finally, the indictment alleges that Piper submitted false individual income tax returns for the tax years 2016, 2017, and 2019, in which he underreported his personal income.
The indictment also contains a forfeiture allegation in which the United States seeks to recover all property representing the proceeds derived from the crimes, including a money judgement.
If convicted, Janbakhsh and Piper face up to 30 years in prison and a $1 million fine.
This case was investigated by the FBI and IRS-Criminal Investigation based upon a referral for investigation and prosecution by the U.S. Trustee’s Office. Assistant U.S. Attorneys Kathryn W. Booth and Thomas Jaworski are prosecuting the case. Assistant U.S. Attorney J. Matthew Blackburn is handling the forfeiture.
All defendants are presumed innocent until proven guilty in a court of law.
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