Operation Lease Fleece targeted individuals in the equipment leasing industry, including loan brokers, equipment vendors and an employee of CitiCaptial, the leasing division of Citibank, which assisted the FBI in the investigation.
Citibank estimates its loss in the fraud at $9.5 million. Other victimized institutions include Wells Fargo Bank, American Enterprise Leasing, Key Bank, Bank of America and U.S. Bank. Total losses are estimated at least $20 million.
In a news release issued the day the charges were filed, the Justice Department stated some of the defendants marketed loans through companies such as Brickbanc to small businesses experiencing credit problems.
Once the businesses agreed to apply for loans, some of the defendants instead submitted equipment-lease applications to lenders. The applications, which allegedly were inflated so that the defendants could obtain lucrative “commissions” for themselves, were submitted along with false invoices that purported to document the sale of computer equipment to the small businesses.
The fraudulently documented equipment-lease applications were submitted because the qualifying criteria were less stringent than a cash loan, according to Mrozek.
After the lending institutions approved the financing, proceeds were used to make cash loans to the small businesses and to pay commissions to employees at companies such as Brickbanc, CapitalWerks in Santa Ana and others.
Hundreds of bogus equipment-lease packages with fake invoices were presented to financial institutions.
The FBI spent more than a year investigating the alleged fraudulent operations.
Charges filed against the 23 defendants included mail fraud, wire fraud and obstruction of justice.
The defendants will be summoned to make court appearance over the next several months.