Rochester Man Sentenced on Bank and Loan Fraud Charges
ROCHESTER, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that, Richard Kaufman, of Pittsford, N.Y., who was convicted following a federal jury trial of conspiracy to commit bank and loan fraud, as well as bank and loan fraud, was sentenced to a 46 months in prison and ordered to pay restitution in the amount of $1,360,893.72 by U.S. District Judge Frank P. Geraci.
Assistant U.S. Attorneys Craig R. Gestring and Bradley E. Tyler, who handled the trial of the case, stated that between 2002 and June 2008, the defendant, and his father Michael C. Kaufman, directed the Controller of American Industrial Sales, d/b/a RAK Industries, to provide false financial statements to Key Bank, and to the company’s outside accounting firm. The false financial statements significantly overvalued the accounts receivable and inventory, which were the two assets that Key Bank relied upon as collateral for a total loan credit of $2,000,000.
The loan proceeds were used by the defendants to fund their personal lifestyles including expensive homes, generous salaries and country club memberships. After the defendants defaulted on the Key Bank loan in the summer of 2007, they converted to their personal use approximately $53,000 of accounts receivable proceeds that were the property of Key Bank. As a result of the fraud scheme, Key Bank suffered an immediate loss of over $1.5 million.
Michael Kaufman was also convicted at trial and is awaiting sentencing.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force 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 who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.The conviction was the culmination of an investigation on the part of Special Agents of the Federal Bureau of Investigation, and Postal Inspectors with the United States Postal Inspection Service under the direction of Shelly A. Binkowski, Postal Inspector in Charge, Boston Division.