Jury Convicts Father and Son of Lying About Collateral to Obtain $2M Loan

Allison Tussey —  April 8, 2014 — Leave a comment

Michael C. Kaufman, and his son, Richard A. Kaufman, both of Pittsford, New York, were convicted by a jury of conspiracy to commit bank fraud, bank fraud, and loan fraud. The charges carry a maximum penalty of 30 years in prison, a fine of $1,000,000, or both.

Between 2002 and November 2007, the defendants directed the controller of American Industrial Sales, d/b/a RAK Industries, to provide false financial statements to Key Bank and to the company’s outside accounting firm. The false financial statements significantly overvalued the accounts receivable and inventory, which were the two assets that Key Bank relied upon as collateral for a total loan credit of $2,000,000.

The loan proceeds were used by the defendants to fund their personal lifestyles, including expensive homes, generous salaries, and country club memberships. After the defendants defaulted on the Key Bank loan in the summer of 2007, they converted to their personal use approximately $53,000 of accounts receivable proceeds that were the property of Key Bank. As a result of the fraud scheme, Key Bank suffered an immediate loss of more than $1.5 million.

Sentencing is scheduled for July 16, 2014, at 3:00 p.m. before Judge Geraci.

U.S. Attorney William J. Hochul, Jr. announced the verdict.

Assistant U.S. Attorneys Bradley E. Tyler and Craig R. Gestring handled the trial of the case.

The conviction is the culmination of an investigation on the part of special agents of the Federal Bureau of Investigation.

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Allison Tussey

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