Feds Indict Honor Finance LLC Officers for Misappropriating $5.3 Million
Diverted extended warranty commission payments part of fraud scheme at illinois-based subprime auto lender
Two top officers of a north suburban subprime auto lending company have been indicted on federal fraud charges for allegedly misappropriating at least $5.3 million in company funds.
The indictment alleges that the defendants fraudulently misappropriated approximately $5.3 million from Honor Finance. The trio transferred some of the misappropriated funds to themselves and their family members, the indictment states.
James Collins was the Chief Executive Officer of Evanston-based Honor Finance LLC, and Robert DiMeo was its Chief Operating Officer. From 2011 to 2018, Collins and DiMeo schemed with an accountant, Michael Walsh to divert money owed to Honor Finance to an outside entity the trio created and controlled, according to an indictment returned Wednesday in U.S. District Court in Chicago. The defendants used the outside entity, Skokie-based LHS Solutions Ltd., to purchase GPS devices and then resell them to Honor Finance at a significant markup, the indictment alleges. Honor Finance required that GPS devices be installed in certain vehicles purchased with loans it financed, so that the vehicles could be located and repossessed if the borrowers defaulted.
The indictment alleges that the defendants fraudulently misappropriated approximately $5.3 million from Honor Finance. The trio transferred some of the misappropriated funds to themselves and their family members, the indictment states. They also used some of the fraud proceeds to pay for a down payment on a lake house in Dowagiac, Michigan, according to the indictment.
The indictment charges Collins, 50, of Evanston, DiMeo, 49, of Park Ridge, and Walsh, 62, of Evanston, with ten counts each of mail fraud. Arraignments via videoconference are set for May 20, 2020, at 10:00 a.m., before U.S. District Judge Robert M. Dow, Jr.
The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago office of the FBI. The government is represented by Assistant U.S. Attorney Matthew Getter.
The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Each count of mail fraud is punishable by up to 20 years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
A copy of the indictment can be viewed here.
Read more at Department of Justice