Long-Time U.P. Gasoline Vendor Sentenced To Prison For Bankruptcy Fraud

U.S. Attorney’s Office
Western District of Michigan
23 April 2018

FOR IMMEDIATE RELEASE

MARQUETTE, MICHIGAN - U.S. Attorney Andrew Birge announced today that David Louis Vernier, age 64, of Ishpeming, was sentenced to 45 months in federal prison followed by 3 years of supervised release for committing bankruptcy fraud. The sentence was imposed by Chief Judge Robert J. Jonker of the U.S. District Court.

David Vernier, the father of Brooke Vernier, came to the attention of special agents of the FBI as they investigated the younger Vernier’s involvement in a $145,000,000 check-kiting scheme that she executed in 2012. Brooke Vernier, the owner of numerous gas stations in the U.P., circulated a huge number of bad checks amongst seven different corporate bank accounts at three different banks in 2012, thus temporarily leading the banks’ accounting systems to erroneously conclude that her accounts held more money than was actually there. When the fraud was discovered, the banks had suffered a loss of more than $1.7 million. She was subsequently convicted of conspiracy to commit bank fraud, sentenced to 18 months in federal prison, and ordered to pay $1,780,232 in restitution to the banks.

Now David Vernier, Brooke’s father, is also headed to federal prison. FBI agents learned that David Vernier ran a number of gas stations in the U.P. in the 2000s, but had fallen into debt. In October 2010, he filed for bankruptcy, claiming to have no real property, no income, no interests in any businesses and more than $3 million in debts. The FBI’s investigation revealed that Vernier was actually involved in running his daughter’s businesses and being paid by them. The FBI also found that he had lied not only in his original bankruptcy petition, but also during subsequent bankruptcy proceedings and in testimony he gave in a related deposition. The investigation showed that he was fraudulently attempting to discharge his more than $3 million in debts while, at the same time, secretly retaining his assets and interests in various businesses.

Vernier’s request to have his debts discharged were denied by Chief Judge Scott W. Dales of the U.S. Bankruptcy Court in May 2012 because Vernier had failed to retain business records that would have allowed the Bankruptcy Court to thoroughly analyze his financial condition. In denying Vernier’s request for bankruptcy relief, Judge Dales asked, "does anybody have a good handle on who owns what . . . or is everything just hopelessly scrambled?" During Vernier’s sentencing on April 19, 2018, Chief Judge Jonker concluded that Vernier scrambled his finances and destroyed records as part of a conscious business plan to defraud his creditors. Chief Judge Jonker also found that Mr. Vernier’s wrongdoing was sustained over a long period of time.

U.S. Attorney Birge commented that: "The bankruptcy process is intended to help honest but unfortunate debtors work with creditors to resolve crushing debt and hopefully get a new financial start on life. But Mr. Vernier tried to abuse the process and get his debts modified or set aside while hiding his true assets and business interests. That’s just another form of fraud. And the consequences for fraud in the federal system are serious, as he can now attest."

During the sentencing hearing, Vernier gave a 40-minute long statement to Chief Judge Jonker. Based on this statement, Chief Judge Jonker concluded that Vernier, despite pleading guilty to bankruptcy fraud, had not accepted responsibility for his crimes.

The case against Brooke Vernier and the subsequent case against David Vernier were investigated by the FBI and prosecuted by Assistant U.S. Attorney Maarten Vermaat.