The criminal prosecution of Eminiano "Jun" Reodica Jr., 72, former head of a California car dealership group whose massive fraud operation in the late-1980s caused nearly $90 million in losses for lenders and investors, came to a close on Monday when he was sentenced to 10 years in prison.
Reodica was indicted in 1994 for bank fraud from 1984-88. At the time, he was president of Grand Wilshire Group of Cos., which operated about two dozen dealerships, including the country's then third-largest store, Grand Chevrolet in Glendora, Calif., the U.S. Attorney's Office for the Central District of California said in a statement Monday.
Grand Wilshire Group had credit agreements with five financial institutions under which it pledged car contracts as collateral on lines of credit. The agreements required Grand Wilshire Group to collect car loan payments from its customers and provide those funds to financial institutions.
Reodica duplicated and forged 812 sales contracts so that the same car contract was promised as collateral with two lenders at the same time. He had employees forge customer signatures on car contracts that were then promised to a second bank, according to the statement. Employees would also sign for car loans on vehicles they were not really buying in order to increase Reodica's line of credit.
Lenders were also kept in the dark when customers were delinquent on their car loans. Reodica used Grand Wilshire Group funds to make car payments to banks on 4,000 customers' loans when delinquency rates exceeded acceptable levels. He also repossessed and resold 392 vehicles from delinquent customers without informing lenders.
Grand Wilshire Group collapsed into bankruptcy in August 1988 and Reodica fled to his native Philippines.
Reodica's scheme resulted in $64.2 million in losses to banks and $24.9 million in losses to investors, according to the statement.
U.S. District Judge S. James Otero, who sentenced Reodica, also ordered him to pay $29.7 million for restitution.
"In addition to the financial institutions, individual investors, who primarily consisted of members of the Filipino community in Los Angeles, trusted defendant with their money, the vast majority of which was lost following the bankruptcy," prosecutors said in the statement.
It wasn't until Nov. 27, 2012, that customs agents arrested Reodica at Los Angeles International Airport during a layover while he was traveling from Australia to Canada. He was using an Australian passport in the name of "Roberto Coscolluela," the name he used while running a tax preparation and insurance business. Reodica has been in federal custody since his arrest.
Nick Bunkley contributed to this report.
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