Federal fraud charges were filed against the CEO, the COO, and accountant of a major finance company, Honor Finance, which specialized in auto loans for subprime borrowers. This announcement, brought by the U.S. Attorney for the Northern District of Illinois and the FBI’s Special Agent in Charge for the Chicago office, consists of charges including the allegation of fraudulently misappropriated funds in the amount of at least $5.3 million. The charges consist of ten counts of mail fraud, which are federal charges as the mail system, a federal system, is used to commit the crime or crimes in question. Each of these counts can bring a maximum of 20 years in prison. It is not known if any of the defendants have engaged an attorney at this time.
Fraud consists of an individual or individuals working to conceal how or through what source or means they obtain a good or service. In this case, fraudulently misappropriating funds would mean diversion of funds with business origins meant for business purposes were used for personal gain or enrichment. Using the mail to further the fraud by transmitting information gives rise to those federal charges. Fraud charges can be based in state and federal law and can vary from misdemeanors to felonies based on the amount of money fraudulently used or obtained by the individual or individuals. State and federal authorities often make the call on what fraud charges can be alleged or proven based on the information they have available to them at the time or that they reasonably believe they are able to prove by the time a trial or crucial negotiations come around.
In this case, it is alleged that the complicated scheme involved the CEO and COO of Honor Finance working with the accountant, who allegedly controlled LHS Solutions, to purchase GPS devices which were then installed on vehicles and whose cost was passed on to the buyers of those vehicles. Notably, it is alleged that the GPS devices were sold to Honor Finance at a markup that was very significant and, as part of a requirement for Honor Finance to provide capital for these deals so, in the event of default, the vehicles could be located and repossessed if necessary. It is also alleged that the proceeds were then diverted from LHS Solutions to the defendants and other individuals and used for personal purposes that were unrelated to the business. The allegations also included using the funds for a down payment on a lake house in Michigan.
The allegations of collusion between Honor Finance and LHS Solutions create the appearance of violation of mail fraud statutes, according to prosecutors. These may just be the beginning of charges against these defendants pending further evidence. Charges against a person are not evidence of guilt and should not be interpreted as such. Additionally, charges should not provide an inference of guilt as a defendant is innocent until proven guilty in a court of law.
South Florida Bank Fraud Attorney
If you are involved in a bank fraud case, then you should hire an attorney. Contact Brian Silber, P.A. to set up a free initial consultation and work with one of South Florida’s most experienced bank fraud attorneys.