A California man has pleaded guilty for his role in a nationwide automobile loan fraud scheme the U.S. Secret Service discovered in Pennsylvania last year.
Alex K. Philip, 30, of Hercules, California, allegedly solicited straw purchasers and then lied about their creditworthiness so the conspirators could obtain auto loans that were never paid back. The crooks split the money among themselves, costing 21 victim banks and credit unions in several states $1 million to $2.4 million, Assistant U.S. Attorney Marshall Piccinini told a federal judge Friday.
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Among other things, Philip faked borrowers' tax and wage documents and used vehicle identification numbers from real cars that were not actually for sale. Banks were told the loans were being used to pay for vehicles being sold by two fictitious firms, Gold Coast Group Worldwide and AM Auto Groups. Banks lost money because there was no real collateral to secure the loans.
Philip pleaded guilty before U.S. District Judge David Cercone in Pittsburgh because the scheme was uncovered last year by U.S. Secret Service agents in Erie, about two hours north of Pittsburgh.
The Erie Federal Credit Union and Erie Community Credit Union were among the financial institutions victimized, Piccinini said.
The prosecutor wouldn't say how many other people prosecutors believe were involved in the scheme, only that Philip is the first to be prosecuted. Piccinini wouldn't say if others would be charged in Pennsylvania or other jurisdictions where the fraud played out.
In all, 64 phony borrowers attempted 150 bogus loans. Piccinini wouldn't say how many loans were successful, or how many people in the scheme worked as "brokers," ''managers," or "processors" of loans described in the charges filed against Philip.
Philip established bank accounts in the name of a phony firm, Philip Investments Inc., through which some of the loan proceeds were moved. Investigators have traced $544,000 from the scheme to Philip's bank accounts, but say at least $219,000 of that was paid out to other participants. Piccinini wouldn't say what may have happened to the rest of the money.
The government is not seeking to force Philip to forfeit any money, which is often done in financial fraud crimes, but he may be ordered to pay restitution to the banks when he's sentenced Feb. 23.
Philip pleaded guilty to bank fraud and a separate count of conspiracy to commit bank and wire fraud. Both charges carry up to 30 years in prison.
Defense attorney Daniel Barton declined to comment after the hearing.