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Fraud Friday – No Jail Time in $1.7 Million SBA Loan Fraud

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July 12, 2013

071213CRPM Image - TiresBy Bob Coleman
Editor, Coleman Report

The owner of a North Carolina tire recycling plant convicted of four counts of loan fraud walked out of the courtroom a free man yesterday.

Federal sentencing guidelines call for a prison term of 51 to 71 months and the prosecutors urged 30 months.

“In 2010, Musgrave applied for an SBA-backed loan for $1,715,650 from the Mutual Federal Savings Bank of Troy. In the loan application documents, he falsely certified that he would put money from his personal savings, home equity and from a home equity line of credit toward the project, according to trial testimony.

“The lender required proof that the tire shredding/recycling equipment and machinery they claimed to have purchased from an Australian company had actually been shipped before releasing the loan proceeds. The jury found that Musgrave provided the lender fabricated financial documents, packing lists, commercial invoices and bills of lading, which are documents used when shipping overseas.”

Continues the local reporting, “The judge said he ‘was reached’ by the numerous letters of support and character witness offerings of six people out of more than 20 friends, family and associates that attended the hearing.

“Among the items the judge listed to explain his ruling were that Musgrave had no criminal record, didn’t receive any of the $1.7 million, lost about $300,000 of his own money, endured ‘four years of Hell,’ would likely lose his certified public accounting license, had medical issues including sleep apnea that require a machine for proper sleep, that his services were needed by his new job in East Dayton and that he was not likely to re-offend.”

The judge did order restitution of $1.7 million, no home detention, three years of supervised release, perform 100 hours of community service and pay a fine of $400, and told our perp “Godspeed” as he exited the courthouse.

Prosecutors objected to the ruling

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