Missouri Man Sentenced in Bank Fraud Case

The former owner of a car dealership in Missouri, Gregg Dean Woods, has been sentenced for his participation in a $1.7 million bank fraud scheme. Woods was sentenced to two years and three months in federal prison without parole. In addition to imprisonment, Woods was ordered to pay $1,340,631 in restitution. Woods, who was the owner of Woods Auto Gallery, Inc., primarily dealing in pre-owned, luxury vehicles, pleaded guilty to the bank fraud charges in October 2009.

Woods admitted to participating in a scheme to defraud Bank Star One, a financial institution headquartered in Missouri. Woods had a $1.9 million line of credit with Bank Star One. Under the terms of their agreement, Woods was required to use the line of credit for the purchase of vehicles to be used as inventory. He would then provide Bank Star One with payment for amounts financed if and when the vehicles were sold.

There were several instances were Woods sold vehicles on consignment. Contrary to the agreement with Bank Star One, he was advanced money against his existing line of credit for those vehicles. In doing so,  Woods purposefully made false representations to Bank Star One in an effort to have funds advanced inappropriately.

In one instance, Woods received $254,500 against his line of credit for a Bentley, a Mercedes, a BMW, and a Hummer. Each of these vehicles was sold on consignment. As a result Woods did not incur any costs for the vehicles; hence there was no need for an advance. Had Woods revealed his activities, the bank would not have advanced the money. In addition, upon sale of the BMW and Hummer, Woods failed to notify Bank Star One of the transactions and failed to pay proceeds from the sales to the bank.

In sum, Woods misrepresented to the bank his inventory and the status of Woods Auto Gallery’s collateral by falsely stating the quantity of vehicles in inventory, the status of the vehicles, the outstanding liens on the vehicles, and other existing financing. Woods admitted to selling vehicles and failing to report the sales and transfer of the proceeds to Bank Star One. In addition, Woods sold consignment vehicles to new customers without paying off outstanding liens or obtaining clear titles to the vehicles. Moreover, on certain circumstances, Woods sold the vehicles and failed to pay the original owners the sales proceeds that were agreed to.

Bank fraud is criminalized under 18 U.S.C. 1344. That statute makes it a crime to knowingly execute or attempt to execute a scheme to defraud a financial institution to obtain, amongst other things, money, funds, or assets under the control of a financial institution by making false representations. Those convicted under this statute can be imprisoned for a period of not more than 30 years or fined not more than $1,000,000, or both.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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