Bucks County(PA) Car Dealer Sentenced for Bank Fraud

Department of Justice ^ | May 19, 2009 | United States Attorney's Office Eastern District of Pennsylvania

[Larry381]

PHILADELPHIA—Michael Sullivan, 38, of New Hope, PA, was sentenced today to 12 months and one day in prison for his scheme to defraud Yardville National Bank (“Yardville”) of approximately $648,106, announced United States Attorney Laurie Magid. The scheme involved a series of misrepresentations concerning the status of collateral that Sullivan was pledging to support a $900,000 loan for his car dealership. Total monetary losses exceed $936,000.

Michael Sullivan was the owner, operator, and president of Sullivan Motors (“Sullivan Motors”), a used automobile dealership with lots located in Fairless Hills, Pennsylvania and Burlington, New Jersey. In 2007, on behalf of Sullivan Motors, Sullivan entered into a loan agreement with Yardville. The loan agreement provided Sullivan with a revolving line of credit for up to $900,000 whose outstanding balance was secured by the automobiles that defendant Sullivan purchased and offered for sale at Sullivan Motors. This type of loan agreement is also known as a “floor plan,” which is a system of financing that permits a dealer to borrow money to buy automobiles, which become the security for the loan that is repaid when the automobiles are sold.

Sullivan defrauded Yardville by (1) drawing on the line of credit by using automobiles as collateral that he had already sold; and (2) failing to repay Yardville for automobiles that he had used for collateral to obtain funds and then later sold. Sullivan also used the same automobiles that he had used for collateral on the line of credit with Yardville to collateralize other loans with other banks. Therefore, Yardville’s interest in any such automobile was compromised because Yardville could not ensure its financial interest in defendant Sullivan’s property.

In January 2008, Sullivan was in default on the loan agreement, and Yardville attempted to exercise its rights to seize the automobiles that Sullivan had pledged as collateral for the funds he had borrowed. As it turned out, most of the automobiles that Sullivan had used for collateral were already sold and Yardville could not seize them. As a result of this scheme, Yardville lost approximately $648,106 in funds that it had loaned to Sullivan Motors but could not collect because defendant Sullivan had misrepresented the status of the collateral to support the loan.

The individuals to whom Sullivan had sold the cars were also defrauded on the value of their trade-ins and the cars they bought in the amount of $288,739.27, for a total loss of $936,845.27. The

individuals lost money because Sullivan did not register their vehicles and did not pay off the loans on the cars they traded in.

The case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Louis D. Lappen.

[Nakota]

Same scam as in the movie Fargo.