United States Attorney
District of Connecticut
Friday, September 7, 2012
Westport Man Sentenced to 45 Months in Federal Prison for Multimillion Dollar Bank Fraud Scheme
Daniel J. Lyons Jr., 55, of Westport, Conn., was sentenced yesterday by U.S. District Judge Robert N. Chatigny in Hartford, Conn., to serve 45 months in prison, followed by five years of supervised release, for defrauding Citizens Bank out of nearly $7 million, announced David B. Fein, U.S. Attorney for the District of Connecticut.
According to court documents and statements made in court, Lyons was the president and chief executive officer of an importing and exporting business known as Greenwich Trading Company, GTC Worldwide Inc. or Greenwich Brands LLC (GTC). In February 2007, Lyons applied to Citizens Bank N.A. for a commercial revolving line of credit (RELOC), to be secured by the business’s accounts receivable, in the maximum amount of $7 million. However, Lyons falsified audit reports and other information when he applied to the bank for the RELOC, and again each time he withdrew additional funds from the line of credit.
As part of the scheme, Lyons submitted monthly borrowing base certificates (BBCs) to the bank to draw down additional funds from the RELOC. The BBCs overstated the outstanding accounts receivable in order to satisfy the bank’s eligibility formula for additional loan disbursements. Between April 2007 and November 2008, Lyons regularly reported to the bank that GTC had between approximately $7.3 million and $9.2 million in accounts receivable.
By November 2008, Lyons had caused GTC to draw down the entire $7 million RELOC loan availability from the bank. The actual accounts receivable, however, totaled approximately $500,000 at that time.
In February 2009, GTC filed a voluntary chapter 7 bankruptcy petition with the U.S. Bankruptcy Court for the District of Connecticut. In the bankruptcy schedules, GTC’s accounts receivable were valued by Lyons at approximately $380,000, leaving little or no collateral to repay the RELOC loan to the bank.
Lyons has been ordered to pay restitution in the amount of $6,983,061.08.
On May 18, 2012, Lyons waived his right to indictment and pleaded guilty to one count of bank fraud.
This matter was investigated by the FBI and was prosecuted by Assistant U.S. Attorney Ann M. Nevins.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov .