Two Executives Indicted in $190MM Equipment Finance Fraud
MAR 3, 2014 - 6:31 am
The U.S. Attorney’s Office for the Northern District of Illinois announced that the owner of a bankrupt Palatine, IL company that sold refurbished semiconductor-making machinery and the owner of a Carlisle, PA company that sold machine tools were indicted for allegedly engaging in a scheme to fraudulently obtain approximately $190 million from banks and financing companies and, eventually, caused those lenders to lose at least $100 million.
According to the news release, one defendant, Mark Anstett, of Lake Forest, IL was president and co-owner of Equipment Acquisition Resources (EAR), which purported to make semiconductor wafers and refurbish machinery used to make semiconductor wafers. His co-defendant, George Ferguson, of Carlisle, PA was owner and president of former Machine Tools Direct (MTD) of Carlisle, PA. A third individual, Sheldon Player, who hid his involvement and role at EAR and whose wife was a co-owner, was named as an unindicted co-schemer. Player, who lived in Chicago, died last November.
Anstett and Ferguson were each charged with five counts of wire fraud, four counts of bank fraud, and one count of mail fraud in a 10-count indictment returned by a federal grand jury. They will be ordered to appear for arraignment on a date to be determined in U.S. District Court in Chicago.
The indictment also seeks forfeiture of approximately $190 million.
According to the indictment, between 2006 and October 2009, Anstett, Ferguson, Player, and others used EAR and MTD to fraudulently obtain approximately $190 million in financing from various lenders based on false representations about EAR’s business operations, financial status, independence from MTD, and need for financing, resulting in losses to those lenders of at least $100 million.
According to the indictment, the lenders that provided financing included: First National Bank of McHenry, Libertyville Bank & Trust, Millennium Bank, Waukegan Bank, First Chicago Bank and IBM Global Finance. The finance companies “that obtained loans from the financial institutions” included: Rockford Capital Leasing, CM Financial and Leasing One.
The defendants allegedly obtained financing for EAR to purchase equipment from MTD and arranged sham sales transactions between the two companies, knowing there were no actual sales. Anstett, Ferguson, and Player falsely represented to lenders that EAR and MTD were separate companies engaged in arms-length sales transactions, the indictment alleges. However, after MTD received financing payments from lenders, Ferguson’s company sent most of the proceeds to EAR so that EAR could use the money to make payments on other loans.
In addition to the indictment, the United States filed a civil lawsuit in federal court in Chicago to forfeit a bed and breakfast inn in Hoback Junction, WY, where Player lived. According to the civil complaint, MTD transferred fraud proceeds it received from lenders to various EAR bank accounts, which were then transferred to other accounts, including a joint account of Player and his wife and another account Player controlled.
Player allegedly used proceeds of the EAR fraud scheme to pay down mortgages on the bed and breakfast. Between 2006 and May 2008, he used approximately $1.8 million in fraud proceeds to pay off two mortgages, making the property subject to forfeiture, according to the civil suit against the premises.
Each count of mail, wire, and bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The Alta Group’s new vice chairman, Jim Merrilees, has noticed a major trend during his first six months consulting in the equipment finance industry: an inability or reluctance of many firms to innovate to attract talent during the current labor... read more
The Equipment Leasing and Finance Association has been making major moves to address the subject of diversity, equity and inclusion (DE&I) within the equipment finance industry. Recently, the ELFA hosted its first annual Equity Forum, a two-day conference in Washington,... read more