Man Jailed for Lying to Bank About Assets to Obtian $2M Loan

Allison Tussey —  August 8, 2014 — Leave a comment

Michael C. Kaufman, Pittsford, New York, who was convicted following a federal jury trial of conspiracy to commit bank and loan fraud, as well as bank and loan fraud, was sentenced to a 12 months in prison and ordered to pay restitution in the amount of $1,360,893.72 by U.S. District Judge Frank P. Geraci.

Between 2002 and June 2008, the defendant, and his son Richard Kaufman, 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 over $1.5 million.

Richard Kaufman was also convicted at trial and sentenced to 46 months in prison.

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

The sentencing is the culmination of an investigation on the part of Special Agents of the Federal Bureau of Investigation, and Postal Inspectors with the United States Postal Inspection Service under the direction of Shelly A. Binkowski, Postal Inspector in Charge, Boston Division.

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

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Allison Tussey

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