Tracy Chevrolet’s Former General Manager Sentenced to More Than Eight Years in Prison for Fraud |
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Topics: Tracy Chevrolet, Stephen M. Kraut
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U.S. Attorney’s Office, Eastern District of California
March 9, 2012
SACRAMENTO—United States Attorney Benjamin B. Wagner announced that Stephen M. Kraut, 49, of Discovery Bay, was sentenced today by United States District Judge Edward J. Garcia to eight years and one month in prison, to be followed by five years of supervised release, and $4.5 million in restitution for 15 counts of bank fraud.
According to court documents, Kraut obtained a line of credit from First Hawaiian Bank for millions of dollars in order for Tracy Chevrolet to purchase cars from wholesalers. Once the vehicles were purchased, Tracy Chevrolet was to resell them to consumers and use the sales proceeds to pay down the line of credit. Kraut fraudulently used the line of credit to pay business expenses and as interest-free loans to fund his other business ventures.
To execute the scheme, Kraut directed an employee to provide First Hawaiian Bank with altered vehicle invoices, and he directed an employee to create false checks payable to automobile wholesalers for more than $100,000. Copies of the false checks were provided to First Hawaiian Bank as proof that Tracy Chevrolet had purchased the vehicles. In fact, the checks were never sent to the wholesalers and never cashed.
In sentencing Kraut, Judge Garcia said that this was an extensive and serious fraud that affected not only the bank, but Mr. Kraut’s business partner, who also suffered losses in the millions of dollars.
United States Attorney Wagner said, “Today’s sentence of eight years for a first-time offender should send the message to white-collar criminals that defrauding lenders and lying to your business partners to keep a failing business going will be punished very seriously.”
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorney Russell L. Carlberg prosecuted the case.
Judge Garcia ordered Kraut to surrender to the Bureau of Prisons on May 11, 2012 to begin serving his sentence. Parole has been abolished in the federal system, and the defendant can be expected to serve at least 85 percent of his sentence.