Thursday, August 17, 2006

Government Obtains Convictions in South Florida Bank Fraud Case

A major bank fraud case in Florida that lasted three months followed by three weeks of jury deliberations resulted in a split verdict on some of the counts, but a guilty finding against all the defendants. (See Miami Herald here)  All were taken into custody immediately (See David Marcus' Southern District of Florida Blog here).  David Marcus raises the question of whether these defendants will be punished more harshly for having exercised their right to a jury trial.

The US Attorney's Office for the Southern District of Florida issued a Press Release that includes the following:

According to the evidence presented at trial, the defendants conspired to fraudulently inflate, by hundreds of millions of dollars, the value of collateral used to obtain loans through Espirito Santo Bank of Florida. The defendants worked for E.S. Bankest, LLC, a company in the business of “factoring.” Factoring involves the purchase of accounts receivable from client companies at a discount. Espirito Santo Bank was a joint venture partner in E.S. Bankest, LLC, and was responsible for arranging funding for E.S. Bankest, LLC’s factoring operations. The accounts receivable E.S. Bankest, LLC, supposedly purchased were to serve as the collateral for the funding arranged by Espirito Santo Bank and provided by Espirito Santo Bank customers.

According to the evidence, over the nine-year period from June 1994 through August 2003, the defendants’ conspiracy deceived Espirito Santo Bank and investors by falsifying financial statements, creating fictitious invoices and checks, using fictitious companies, and engaging in other machinations to create the appearance that millions of dollars in fictitious accounts receivable were actually real. Through these tactics, defendants deceived Espirito Santo Bank, federal banking regulators, and independent public accounting firms that examined E.S. Bankest, LLC, about the value of the accounts receivable owned, all to support additional loans through the bank. As a result of their schemes, the conspirators fraudulently obtained approximately $170 million in loan proceeds.

(esp) (w/ thanks to David Marcus for the hat tip)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2006/08/government_obta.html

Fraud, Verdict | Permalink

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Comments

It does not seem like it is often that criminals pay for financial crimes. More often than nought they get just a slap on the wrist.

Posted by: Tracy | Jan 6, 2009 1:58:28 PM

with a huge thanks to the US banks, we are all back to square one on our attempt to be the greatest nation in the world. i hail obama for his noble efforts on alliviating not only bankcruptcy in our economy but the moral bankcruptcy in the people who run these offices.

Posted by: Jason H. | Feb 2, 2010 12:16:52 PM

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