A Superseding Indictment charges a prominent Ocean City, New Jersey developer with eight new fraud counts for numerous misrepresentations to financial institutions in getting more than $36 million in loans – most of which went into default – for business projects and personal property, U.S. Attorney Christopher J. Christie announced.
The nine-count Superseding Indictment charges James M. Dwyer, 61, of Petersburg, New Jersey with five bank fraud counts, two wire fraud counts, one count of bankruptcy fraud and one count of making false statements in a bank application to influence bank draws for a construction loan. Dwyer’s original Indictment in March 2003 charged only one count of bank fraud.
The Superseding Indictment describes Dwyer‘s scheme to provide false documents to various financial institutions to secure loans. Dwyer fabricated three compilation opinion letters which falsely indicated that the accompanying statements of financial condition as of December 1998, June 1999, and September 1999 were prepared by Gallo and Co., C.P.A.s, of Cherry Hill, when in fact they were not.
The Indictment alleges that Dwyer also submitted false U.S. Individual Income Tax Returns, which claimed adjusted gross income of $873,156 for tax year 1996, $1,699,924 for 1997 and $3,833,503 for 1998. However, U.S. Individual Income Tax Returns that Dwyer filed with the IRS reported an Adjusted Gross Loss of $778,819 for 1996, a loss of $298,610 for 1997 and a loss of $2,523,618 for 1998, according to the Indictment.
The original one-count Indictment charged Dwyer with one count of bank fraud in connection with a scheme to defraud National Penn Bank (NatPenn) by making false and fraudulent representations and promises as part of a $16 million construction loan agreement. According to the Indictment, the loan was intended to refinance the creation of office condominium units and related site improvements at the Linwood Business Campus (LBC) in Petersburg, to be accomplished by JMD-VJ-Linwood LLC (JMD-Linwood), of which Dwyer was the principal. Under the loan agreement, all funds were to be disbursed in accordance with a construction draw schedule and cost breakdown satisfactory to NatPenn.
In April 2001, Dwyer defaulted on the construction loan, owing NatPenn approximately $9 million, according to the Superseding Indictment.
The Superseding Indictment describes additional instances between February 1999 and April 2001 where Dwyer allegedly used the false and fraudulent personal financial information mentioned above to secure finance/refinancing and construction loans with a total value of over $36 million on both personal and business property.
According to the Superseding Indictment, Dwyer was the principal owner of Flanders Hotel/Condominium and Watson’s Regency Hotel, both in Ocean City. Between March 1999 and September 2000, Parke Bank, with offices in Sewell, made eight loans to Dwyer, either individually, with his wife or through his business entity JMD-Linwood, totaling $6,545,400, according to the Indictment.
The Indictment states that the loans included a $1 million loan to refinance Dwyer’s residential mortgage on his penthouse property at the Flanders Hotel/Condominium; a $2,782,900 loan to refinance debt on the Flanders parking lot; $300,000 to refinance retail store/condominium unit #1 at the Flanders; $200,000 to refinance three condominium units at Watson’s Regency Hotel; $300,000 for real estate investment purposes at Watson’s Regency Hotel; $937,500 to purchase and/or refinance retail store/condominium units #2, 4 and 5 at the Flanders; and, a $725,000 loan to fund deposits on the Linwood Business Campus development project.
According to the Indictment, before making its decision to fund the above loans Parke Bank required Dwyer’s personal financial information. The Indictment alleges the financial information Dwyer submitted was false. Then, according to the Indictment, in March 2001, Dwyer defaulted on the above loans, owing Parke Bank approximately $6 million.
The Indictment also alleges that Dwyer defrauded three additional banks and two private financial institutions through his scheme, in which he provided the fraudulent financial documents in order to obtain loans. According to the Indictment, for example, in May 2000, as a 100 percent shareholder and president of JMD, REID, VJX, Inc., a New Jersey corporation with offices in Ocean City, Dwyer signed on behalf of the corporation for a $3.15 million loan from First Republic Bank in Philadelphia, to refinance a $1.25 million loan and for $1.9 million in expenses in connection with the purchase of two real estate properties, the Packard Building and the Jewish Federation Building, both located in Philadelphia. In April 2001, Dwyer defaulted on the loan owing First Republic the full principal amount of $3.15 million.
The Indictment states that Dwyer, through his various businesses, also defrauded Willow Grove Bank, with offices in Maple Glen, Pa., on a $675,000 loan to refinance the Ocean Room Restaurant at the Flanders Hotel; Roxborough Manayunk Bank, with offices in Philadelphia, on a $5.7 million loan to refinance the mortgage on the Homestead Hotel in Ocean City; Amresco Commercial Finance, Inc., a privately-held corporation with offices in Boise, Idaho, on a loan for $9,444,444 with the proceeds used to refinance a pre-existing Amresco loan and the remaining $4.6 million wired into a bank account in Dwyer’s name; and, Cambridge Holdings Group, Inc., a privately-held corporation with its principal office in Washington, D.C., on a loan of $1.5 million.
The Superseding Indictment also alleges that during a November 2003 deposition in connection with Dwyer‘s bankruptcy filing, while under oath, he made false statements regarding two documents concerning the Dwyer‘s family assets. During the deposition, Dwyer testified that a document titled “Dwyer’s Family Inventory Sale Value $95,000″ was prepared on April 3, 2001, by an individual identified in the Indictment as M.H. According to the Indictment, Dwyer stated that he and his son signed the document while having it notarized that same day. Dwyer also stated that he did not provide M.H. with the $95,000 value and that he was not informed by M.H. that the amount was improper and should have been valued well in excess of $100,000. According to the Indictment, the second document, which was also signed by Dwyer and notarized on April 3, 2001, was titled “Bill of Sale” and purported to indicate that the inventoried items were sold to Dwyer’s son for $95,000.
According to the Indictment, Dwyer‘s statements were not truthful because the inventory document and the bill of sale document were not prepared until several months later — shortly before the bankruptcy filing. Furthermore, Dwyer did in fact provide M.H. with the $95,000 value which was placed on the inventory document and M.H. did inform the defendant that the amount was improper and should have been valued well in excess of $100,000.
Dwyer is scheduled to be arraigned on the Superseding Indictment March 26, 2004, before U.S. District Judge Jerome B. Simandle.
The maximum statutory penalty for each count of bank fraud is 30 years imprisonment and a fine of $1,000,000. Each wire fraud counts carry am maximum penalty of 5 years imprisonment and a fine of $250,000. The false statements in bank application charge carries a maximum of 30 years imprisonment and a fine of $1,000,000. The bankruptcy fraud charge carries a maximum penalty of 5 years imprisonment and a fine of $250,000.
Despite Indictment, every defendant is presumed innocent, unless and until found guilty beyond a reasonable doubt, following a trial at which the defendant has all of the trial rights guaranteed by the U.S. Constitution and federal law.