Columbia Automotive Dealer Pleads Guilty to $1.7 Million Bank Fraud Scheme

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JEFFERSON CITY, MO—David M. Ketchmark,Acting United States Attorney for the Western District of Missouri, announcedtoday that the owner of three Columbia, Missouri auto dealerships has pleadedguilty in federal court to an alleged $1.7 million bank fraud scheme thatinvolved financing for more than 100 vehicles.
Aaron Matthew Payne, 39, of O’Fallon,Missouri, pleaded guilty on Tuesday, May 29, 2012 to the charge contained in aSeptember 2, 2011 federal indictment.
Payne was the owner and/or operator ofColumbia Car Classics Inc.; Mid-America Truck Sales, II Inc.; and Kingdom Auto,II Inc., businesses in Columbia that primarily sold pre-owned and luxuryvehicles. Payne obtained in excess of $1 million in lines of credit for thesebusinesses through his agreements with several financial institutions.
By pleading guilty today, Payne admittedthat, beginning in March 2007, he engaged in a scheme to defraud severalfinancial institutions. The government contends that Payne’s scheme, whichinvolved financing for 118 vehicles, resulted in a total loss of $1,751,407.According to the government, The Callaway Bank sustained more than $1.2 millionin losses related to 78 vehicles. Other financial institutions that sustainedlosses as a result of Payne’s scheme included Missouri Credit Union, DealerServices Corporation, Manheim Automotive Financial Services, Blue Ridge Bankand Trust, Boulevard Bank, Ford Motor Credit Company, and Jefferson Bank ofMissouri.
Payne admitted that he took money bydeception and fraud and used the funds in an unauthorized and unapproved mannerfor the benefit of his companies. Payne did this by knowingly misrepresentingand mischaracterizing vehicles purchased under the available lines of credit inviolation of the agreements. For example, Payne carried vehicles on thebusinesses’ floor plan as if they were a part of inventory, when the vehicleshad actually been sold.
Payne knowingly misrepresented hisinventory to The Callaway Bank, as well as the status and quality of thecollateral for loans made by the bank to his businesses. Payne falsely statedthe quantity of vehicles in inventory, and falsely represented the ownership ofvehicles, the outstanding liens, and other existing financing on the vehicles.Payne sold vehicles and then purposely failed to report the sales and transferthe proceeds of those sales to The Callaway Bank.
Under federal statutes, Payne is subjectto a sentence of up to 30 years in federal prison without parole, plus a fineup to $1 million. A sentencing hearing will be scheduled after the completionof a presentence investigation by the United States Probation Office.
This case is being prosecuted byAssistant U.S. Attorney Anthony P. Gonzalez. It was investigated by the FBI.