December 15, 2017
By Bob Coleman
Editor, Fraud Friday
Fraud Friday — Borrower Pleads Guilty to $1.7 Million Fraud
A Missouri small businessman sold his business for $2 million. United Community Bank loaned the buyers$1.7 million.
The problem is Todd Rood, 46, falsified the financials. He claimed profits of over $500,000.
Writes the Western District of Missouri US Attorney, “Rood is the former owner of Rood Machine & Engineering. By pleading guilty, Rood admitted that he made false statements to the purchaser’s bank about his assets and liabilities during the sale of his business.
“Rood falsified documents in 2015 and 2016 outlining the assets and liabilities of his business in a scheme to defraud RME’s buyers and their financial institution. The total loss amount resulting from Rood’s criminal conduct is $1,347,608.
“The purchasers agreed to pay $1,975,208 for Rood’s business and borrowed $1,744,000 from United Community Bank (based in Georgia). But for Rood’s false statements, the bank would not have made a $1,744,000 loan because RME’s value, including its business value and real estate, did not support that loan amount. By altering his bookkeeping, Rood inflated his income by approximately $583,827 prior to the sale.”