Woman Admits Using Fraudulent Information to Defraud Lenders

Allison Tussey —  March 3, 2015 — Leave a comment

Carolyn Marie Jones, 51, Corona, California, who was the chief executive officer of a high-end jean company that outfitted Hollywood celebrities, pleaded guilty in federal court to bank fraud and bankruptcy fraud offenses admitting she used fraudulent information to defraud lenders.

The defendant pleaded guilty in federal court to one count of bank fraud and one count of concealing assets in a bankruptcy proceeding.

Jones pleaded guilty before United States District Judge Michael W. Fitzgerald, who is scheduled to sentence the defendant on May 11. At sentencing, Jones will face a statutory maximum sentence of 35 years in federal prison and a fine of $1.25 million.

According to a plea agreement, Jones defrauded Union Bank of California in a scheme related to her company, DDI (sometimes known as Diamond Decisions, Inc.), which sold jeans under the labels Privacywear and PRVCY Premium. Union Bank issued an $8.5 million line of credit – which was later increased to $15 million – to Jones in late 2008, but Jones had filed a fraudulent loan application that used another person’s social security number, bogus tax returns that had never been filed with the Internal Revenue Service and false financial statements for DDI that grossly overstated the company’s profits.

Jones also admitted in the plea agreement that the accounting firm she claimed had audited her financial statements was a sham company. Jones also admitted she lied to Union Bank employees, including the loan officer. In court, she apologized to the identity theft victim whose information was used on the fraudulent loan documents.

Jones soon defaulted on the $15 million loan, and Union Bank filed a civil lawsuit against DDI in state court. When the court issued an order authorizing Union Bank to seize the company’s assets, Jones filed a Chapter 11 bankruptcy petition in February 2010 that listed the bank as the sole creditor. In the following months, Jones concealed DDI assets, specifically about $120,000 that she had received from DDI customers.

As part of the plea, Jones agreed to pay $15 million in restitution to Union Bank and $124,000 in restitution to victims who invested in another scheme.

Jones pleaded guilty in relation to two cases that were the result of an investigation conducted by the United States Secret Service and IRS – Criminal Investigation. The United States Trustee’s Office provided valuable assistance during the investigation.

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Allison Tussey

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