A Cornelia man has pleaded guilty to a $3 million wire fraud scheme.
The scheme that 56-year-old Mitchell Simpson used defrauded companies that provided floor-plan financing to his used-car dealership according to a press release from Northern District of Georgia U.S. Attorney Ryan Buchanan.
“The defendant abused the trust of the companies that loaned him money to operate his car dealership,” Buchanan said.
Simpson operated Mitch Simpson Motors from, a used-car dealership in Cleveland, Georgia, from 2012 to 2019. Three floor-plan lenders, Dealer Financial Holdings LLC, Americash Advance, Inc., and Floorplan Xpress, LLC, provided Simpson with a “revolving line of credit” for Simpson to purchase his inventory of vehicles to sell.
Simpson would contact one of the floor-plan lenders when he wanted to borrow money to get a vehicle. Simpson was required per the agreements to provide information about the vehicles and disclose if the vehicle was subject to any other liens or security interests according to officials.
Simpson would then receive the loan, and in return, the dealership would grant the lender a purchase-money security interest in the vehicle. In other words, the creditor would get priority position to the collateral. In this case, this was the vehicle.
Simpson defrauded the lenders by using a single vehicle as collateral for more than one loan. The used-car industry refers to this illegal practice as double floor-planning and triple floor-planning according to the release.
To hide this, Simpson made “false and misleading statements” and “omitted material facts” to the lenders.
Whenever Simpson sold a vehicle, he was required to hold the money made in trust for the lender and pay them their due under the agreement.
However, Simpson did not always pay up. According to Buchanan’s office, he did not always provide information to the lenders concerning the location or sale status of the vehicles. This scheme resulted in a loss of more than $3 million to the lenders.
This case is also being investigated by the Federal Bureau of Investigation (FBI). Assistant U.S. Attorneys John Russell Phillips and David A. O’Neal are prosecuting this case.
Sentencing for Simpson is scheduled for Oct. 8 at 11 a.m. before the U.S. District Judge Steve C. Jones in Gainesville.
http://accesswdun.com/article/2024/7/1250817/cornelia-man-pleads-guilt-to-3-million-wire-fraud-scheme