California Attorneys Charged With Misappropriating Settlement Funds Intended for Relatives of Victims of Lion Air Flight 610
CHICAGO — The former chief executive officer of a suburban Chicago subprime auto lending company has been charged in federal court with orchestrating a scheme that defrauded a bank of approximately $54.5 million.
JAMES COLLINS was the CEO of Evanston, Ill.-based Honor Finance LLC. From 2015 to 2018, Collins schemed with another top Honor executive to submit false information to the bank about a portfolio of loans made to subprime borrowers, in an effort to maintain a certain level of funding from a line of credit provided to Honor by the bank, according to an indictment returned in U.S. District Court in Chicago. The false information also allowed Collins and his co-schemer to increase the amount of funding they received from a trust established by Honor and the bank to securitize thousands of loans in Honor’s portfolio and sell them as bonds to investors, the indictment states. The indictment alleges that Collins selected delinquent vehicle loans for the trust that he knew were not eligible to be included in the portfolio because Honor and its affiliates had previously advanced money to the borrowers through the use of improper accounting entries. Collins hid the ineligibility of these loans from the bank, bond investors, and rating agencies, the indictment states.
As a result of Collins’s false representations and material omissions regarding the line of credit and the trust, the bank lost approximately $54.5 million, the indictment states.
The indictment charges Collins, 53, of Evanston, Ill., with 15 counts of bank fraud and two counts of securities fraud. Arraignment is scheduled for Dec. 19, 2022, at 10:00 a.m., before U.S. Magistrate Judge Beth W. Jantz.
The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and John S. Morales, Acting Special Agent-in-Charge of the Chicago Field Office of the FBI. Valuable assistance was provided by the U.S. Securities and Exchange Commission. The government is represented by Assistant U.S. Attorneys Matthew Getter and Paige Nutini.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. Each count of bank fraud is punishable by up to 30 years in federal prison, while each securities fraud count carries a maximum of 20 years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.