InfoBytes Blog
Vehicle Financing Company Owners Plead Guilty to $11 Million Fraud
On May 25, the Massachusetts U.S. Attorney’s Office announced that two vehicle financing company owners (Defendants) entered guilty pleas admitting to counts of mail and wire fraud. The Defendants’ company raised capital by securing investments from individuals to fund its operations. In 2015, the DOJ filed a criminal complaint alleging the Defendants represented to investors that retirement account funds could be rolled over into investments held by the company without triggering the payment of income taxes on the transferred monies. Investors allegedly transferred retirement funds based on these representations, and the Company ultimately lost more than $11 million of the investors’ money. However, the Defendants allegedly never obtained approval from Treasury for the company to act as an authorized custodian or trustee of retirement funds as required in order for the rules permitting tax-free transfers to apply, and therefore solicited the investment funds based on “deceptive acts, false and fraudulent statements and misrepresentation of material facts.” The company ultimately filed for bankruptcy. The plea agreements stipulate maximum penalties of “20 years in prison, three years of supervised release, a fine of $250,000 or twice the gross gain or loss, whichever is greater, a mandatory special assessment of $100, restitution, and forfeiture to the extent charged in the Indictment” and can be accessed here and here. Sentencing is set for September 20, 2017.