(Source: FBI) - David B. Fein, United States Attorney for the District of Connecticut, today announced that Daniel J. Lyons, Jr., 55, of Westport, was sentenced yesterday by United States District Judge Robert N. Chatigny in Hartford to 45 months of imprisonment, followed by five years of supervised release, for defrauding Citizens Bank out of nearly $7 million.
According to court documents and statements made in court, Lyons was the president and chief executive officer of an importing and exporting business known as Greenwich Trading Company, GTC Worldwide Inc. or Greenwich Brands, LLC (“GTC”). In February 2007, Lyons applied to Citizens Bank N.A. for a commercial revolving line of credit (RELOC) to be secured by the business’ accounts receivable, in the maximum amount of $7 million. However, Lyons falsified audit reports and other information when he applied to the bank for the RELOC, and, again, each time he withdrew additional funds from the line of credit.
As part of the scheme, Lyons submitted monthly borrowing base certificates (BBCs) to the bank to draw down additional funds from the RELOC. The BBCs overstated the outstanding accounts receivable in order to satisfy the bank’s eligibility formula for additional loan disbursements. Between April 2007 and November 2008, Lyons regularly reported to the bank that GTC had between approximately $7.3 million and $9.2 million in accounts receivable.
By November 2008, Lyons had caused GTC to draw down the entire $7 million RELOC loan availability from the bank. The actual accounts receivable, however, totaled approximately $500,000 at that time.
In February 2009, GTC filed a voluntary Chapter 7 bankruptcy petition with the United States Bankruptcy Court for the District of Connecticut. In the bankruptcy schedules, GTC’s accounts receivable were valued by Lyons at approximately $380,000, leaving little or no collateral to repay the RELOC loan to the bank.
Lyons has been ordered to pay restitution in the amount of $6,983,061.08. On May 18, 2012, Lyons waived his right to indictment and pleaded guilty to one count of bank fraud.
This matter was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Ann M. Nevins.
Today’s announcement is part of efforts underway by President’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
