A federal judge has sentenced a former Michigan dealer to two years in prison for defrauding a bank of more than $400,000 through false loan applications in an unsuccessful scheme to save his failing dealership.
U.S. District Judge Robert Holmes Bell also ordered Rodney Lindrus, 53, to pay a $5,000 fine and make restitution to Bank One, Michigan, in Detroit, which was called National Bank of Detroit at the time of the 1997 scheme.
Lindrus pleaded guilty in U.S. District Court in Marquette to falsifying 18 loan applications over a nine-month period in an unsuccessful effort to keep Lindrus Chevrolet-Oldsmobile Inc. of Hancock open. While the indictment involves about $400,000, the bank estimated its loss at more than $1 million.
A General Motors spokesman said the company was not involved in the criminal prosecution.
The dealership closed in January 1998 after 14 years of ownership, and the building now is being used by a local school district as a vocational center.
18 loan applications
Federal prosecutors said Lindrus used the names of 17 customers as well as his own name to obtain vehicle loans before the bank realized it had not received payments. When the bank contacted the purported borrowers, they responded that they had not applied for the loans and did not have the vehicles, according to the plea agreement filed in court.
The bank had an arrangement to provide financing for the dealership's customers. Under that procedure, the dealership prepared applications for the buyers to sign, then faxed them to the bank for a review of creditworthiness and approval.
For the fraud scheme, Lindrus used 'the true identities and credit histories of persons who had previously bought cars from him,' the plea agreement said. 'He then forged the signatures of the purported borrowers on these bogus applications and submitted them to the bank. The bank in turn approved the applications, believing the money was going to be used to pay for vehicles being sold to the persons identified in the applications and believing their extensions of credit would be secured by the vehicles.'
The proceeds were deposited into the dealership's accounts at two local banks. 'When the scheme unraveled, the bank discovered it had been defrauded into giving Lindrus a total of $415,917 in loan proceeds which were, in fact, totally unsecured,' the agreement said.
Lindrus confessed after his arrest and cooperated with authorities. He pleaded guilty to one charge of using the proceeds of illegal activity, namely fraud, to engage in banking transactions.
Defense lawyer Joseph Zelez-nik of Ontonagon said his client has repaid some of the money.
A week before the sentencing, Lindrus and his wife filed for bankruptcy protection, listing liabilities of almost $2.8 million, including business-related debts. They listed about $364,000 in assets.
Bankruptcy trustee Colleen Olson said a bankruptcy discharge would not eliminate the criminal fine or Bell's restitution order. A first meeting of creditors is scheduled for Tuesday, Dec. 7.