Business Owner Admits Orchestrating $3 Million Bank Fraud
NEWARK, N.J. – The owner of a Phillipsburg, N.J., luggage manufacturing company admitted today that he defrauded the Lakeland Bank of Oak Ridge, N.J., of $3 million, U. S. Attorney Paul J. Fishman announced.
Richard Rekuc, 59, of Asbury, N. J., pleaded guilty before U. S. District Judge William J. Martini in Newark federal court to an Information charging him with one count of bank fraud.
According to the documents filed in this case and statements made in court:
Rekuc operated a luggage manufacturing company called Royalox International Inc, based in Phillipsburg. Rekuc arranged with Lakeland Bank to obtain a line of credit for Royalox that was based on Royalox’s accounts receivable: the higher Royalox’s sales, the more money it could borrow from the line of credit.
An investigation led by the Federal Deposit Insurance Corporation revealed that between 2004 and December 2009, Rekuc was submitting false invoices and copies of payments to Lakeland so that he could draw on his line of credit. Rekuc first opened fake bank accounts in names very similar to some of the clients with whom Royalox did business. Rekuc moved money from bank accounts he controlled to the fake accounts. He then created fictitious invoices, billed the fictitious “companies,” and made payments from the fake company accounts to Royalox. Rekuc submitted the false invoices and the copies of the payments from the fake company accounts to the Royalox accounts.
These false documents gave Lakeland the impression that Royalox was doing a substantial amount of business and was entitled to draw off the accounts receivable line of credit to cover payments for materials and other expenses. In fact, Rekuc was pocketing the money. Rekuc’s actions caused Lakeland Bank to lose $3 million.
The bank fraud charge to which Rekuc pleaded guilty carries a maximum potential penalty of 30 years in prison and a $1 million fine. Sentencing is set for May 6, 2013.
U.S. Attorney Fishman credited special agents of the Federal Deposit Insurance Corporation under the direction of FDIC-Office of Inspector General, Inspector General Jon. T. Rymer, with the investigation which led to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
This case was brought in coordination with President Barack Obama’s interagency Financial Fraud Enforcement Task Force, which was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement.
Defense counsel: Donald McCauley Esq., Newark, N.J.