CHICAGO–(ENEWSPF)–February 28, 2014. An owner of a bankrupt Palatine company that sold refurbished semiconductor-making machinery and the owner of a Pennsylvania company that sold machine tools were indicted for allegedly engaging in a scheme to fraudulently obtain approximately $190 million from banks and financing companies and, eventually, causing those lenders to lose at least $100 million.
One defendant, MARK ANSTETT, 58, of Lake Forest, was president and co-owner of Equipment Acquisition Resources, Inc., (EAR), of Palatine, which purported to make semiconductor wafers and refurbish machinery used to make semiconductor wafers. His co-defendant, GEORGE FERGUSON, 69, of Carlisle, Pa., was owner and president of the former Machine Tools Direct, Inc., (MTD) of Carlisle. A third individual, Sheldon Player, who hid his involvement and role at EAR and whose wife was a co-owner, was named as an unindicted co-schemer. Player, who lived in Chicago before moving to Hoback Junction, Wyo., died last November.
Anstett and Ferguson were each charged with five counts of wire fraud, four counts of bank fraud, and one count of mail fraud in a 10-count indictment returned by a federal grand jury yesterday and announced today. They will be ordered to appear for arraignment on a date to be determined in U.S. District Court in Chicago.
The indictment also seeks forfeiture of approximately $190 million.
According to the indictment, between 2006 and October 2009, Anstett, Ferguson, Player and others used EAR and MTD to fraudulently obtain approximately $190 million in financing from various lenders based on false representations about EAR’s business operations, financial status, independence from MTD, and need for financing, resulting in losses to those lenders of at least $100 million. The defendants allegedly obtained financing for EAR to purchase equipment from MTD, and arranged sham sales transactions between the two companies, knowing there were no actual sales. Anstett, Ferguson, and Player falsely represented to lenders that EAR and MTD were separate companies engaged in arms-length sales transactions, the indictment alleges. However, after MTD received financing payments from lenders, Ferguson’s company sent most of the proceeds to EAR so that EAR could use the money to make payments on other loans.
In addition to the indictment, the United States today filed a civil lawsuit in Federal Court in Chicago to forfeit a bed and breakfast inn in Hoback Junction, Wyo., where Player lived. According to the civil complaint, MTD transferred fraud proceeds it received from lenders to various EAR bank accounts, which were then transferred to other accounts, including a joint account of Player and his wife and another account Player controlled.
Player allegedly used proceeds of the EAR fraud scheme to pay down mortgages on the bed and breakfast. Between 2006 and May 2008, he used approximately $1.8 million in fraud proceeds to pay off two mortgages, making the property subject to forfeiture, according to the civil suit against the premises.
Each count of mail, wire, and bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The indictment and forfeiture complaint were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and John Lucas, Special Agent-in-Charge of the Federal Deposit Insurance Corp., Office of Inspector General in Chicago.
The government is being represented by Assistant U.S. Attorney Jason Yonan.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.