A federal appeals panel has upheld a 48-month prison term for a former dealership employee who used customers' credit information to defraud Cincinnati-area banks of an estimated $100,000.
The 6th U.S. Circuit Court of Appeals unanimously affirmed the sentence of Maclevader Smith, who admitted participating in a scheme to obtain loans on the strength of social security numbers and credit history information obtained from his former employer.
He pleaded guilty to bank fraud after a 1997 FBI investigation.
According to his attorney and the prosecuting attorney, Smith had worked at Metrolina Dodge in Charlotte, N.C. The dealership told Automotive News it did not have record of Smith's employment; the appeals court did not specify the dealership's name in the opinion.
According to the 6th Circuit, after leaving the dealership, Smith bought credit histories from an employee there, sold the information to Maurice Stephens and instructed Stephens on how to obtain false identification cards.
'Stephens, in turn, recruited several young women to obtain false identification in the names associated with the stolen credit histories,' the appeals court said in an opinion by Judge David Nelson.
The dealership was not involved in the wrongdoing, and the dealership employee who supplied the credit information to Smith has not yet been prosecuted, Assistant U.S. Attorney John DiPuccio said.
DiPuccio said investigators documented $78,000 in fraudulent loans 'but the agents think it was higher and could have been over $100,000.'
The scam involved applications for small, unsecured loans of under $5,000 each, according to C. Ransom Hudson, who represented Smith on appeal. 'A loan would be applied for by phone, and then the women with the false identification would go to the bank, sign the required documentation and leave with the loan proceeds.' Stephens accompanied the women to the banks more often than Smith, he said.
DiPuccio said the banks had approved the loans without verifying the applicants' purported addresses.
In its decision, the appeals court said, 'The undisputed evidence supports a reasonable conclusion that Smith, in conjunction with Stephens, initiated and oversaw the execution of the fraudulent scheme.'
It said Smith 'admitted his participation' in the scam.
Stephens also was convicted and sentenced to prison.
Hudson said he doesn't expect his client to appeal further.