Former Milan Used Car Dealers Charged with $1.47 Million Bank Fraud |
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Topics: Blackhawk Auto
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U.S. Attorney’s Office, Central District of Illinois
February 24, 2011
ROCK ISLAND, IL—The former owners of a Milan, Illinois used car business known as Blackhawk Auto were arrested today and appeared in federal court in Rock Island on charges of bank fraud. Jens Hirsch, 44, and Pamela A. Hirsch, 54, both of the 2800 block of 27th Street, Rock Island, Illinois, appeared this afternoon before U.S. Magistrate Judge Thomas J. Shields. Both were ordered detained in the custody of the U.S. Marshals Service pending a detention hearing scheduled for Mar. 1, at 3:00 p.m.
The indictment alleges that from April 2007 to September 19, 2007, Jens Hirsch, as president, and Pamela Hirsch, as vice-president and secretary of Strategic Enterprises, Inc., doing business as Blackhawk Auto, located at 1920 East First Avenue, Milan, defrauded a Milan bank of $1,465,363. During the period of the alleged scheme, Blackhawk Auto had an agreement with the bank for a line of credit of $1.5 million to purchase vehicles for resell on its lot. Upon sale of the vehicle, Blackhawk Auto was to repay the bank the outstanding balance for the respective vehicle. Instead, the indictment alleges Jens and Pamela Hirsch repeatedly and intentionally failed to repay the bank and diverted the sale proceeds to other uses. Over a four-month period, from April to September 19, 2007, the indictment alleges that the proceeds from at least 83 vehicles, approximately $750,973, was diverted to other uses.
The indictment further alleges that in April, May, July, and August of 2007, Jens Hirsch and Pamela Hirsch also caused false financial statements to be prepared and submitted to the bank, which falsely inflated the income and net profit of Blackhawk Auto. The alleged false statements were used to influence the bank's decision to continue to advance line of credit funds to Blackhawk Auto, which received approximately $1,465,363 in loan proceeds advanced by the bank.
According to the indictment, because the loan was secured by vehicles financed with the line of credit, bank personnel had the right to conduct inventory checks of the premises. In some instances, the defendants allegedly falsely reported the vehicle in question as being in "pending funding status," meaning that a customer had signed an agreement to purchase the vehicle and had taken possession of it, but the financing arrangement with the customer's lender was not yet final. In fact, according to the indictment, the respective lenders had already funded the sale proceeds for the vehicles but the defendants had directed that those sale proceeds be diverted for purposes other than repaying the bank.
A federal grand jury previously returned the indictment against the Hirsches; however, the indictment had remained sealed pending the defendants' arrest and initial court appearance.
The defendants are each charged with one count of conspiracy to commit bank fraud, 13 counts of bank fraud, and four counts of making false statements. Jens Hirsch is charged with five additional counts of making false statements. If convicted, the penalty for each of the offenses, conspiracy to commit bank fraud, bank fraud, and making a false statement, is up to 30 years in prison and a fine of up to $1,000,000.
Members of the public are reminded that an indictment is merely an accusation; the defendants are presumed innocent unless proven guilty.
The charges are the result of an investigation by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney John K. Mehochko.