September 23, 2016
Fraud Friday — Fraudulent Construction Loan Draws Lands Developer in Prison
By Bob Coleman
Editor, Fraud Friday
Twenty-eight year old Arkansas developer Brandon Woodrome pled guilty yesterday to two counts of bank and wire fraud for diverting funds from a $795,000 construction loan.
The First Western Bank loan was to fund the purchase of land and build a medical clinic and strip center in Fort Smith.
US Attorney Kenneth Elser says, “The loan agreement required him to submit invoices for work the subcontractors had completed. Woodrome created and submitted fraudulent invoices that contained material misrepresentations about construction work he knew had not been done by subcontractors to First Western Bank for payment.
“The bank issued cashier’s checks based on receiving the invoices. The bank and subcontractors verified the invoices that were paid by the bank were false. Woodrome was paid in excess of $300,000 from First Western Bank between November 2014 and December 2014 for fraudulent invoices he had submitted to them.
“Woodrome also defrauded RIOUX Capital in Austin of approximately $1.8 million by submitting fraudulent invoices by email. RIOUX Capital is a company that buys accounts receivable from business entities and then pays the entities approximately 80 percent of the face value of the accounts receivable purchased.
“Woodrome established a line of credit with RIOUX allowing him to sell his accounts receivable to them . In February 2015, Woodrome began building a retail shopping center in Fort Smith for a company that owned the undeveloped land. The landowner had already obtained financing for the project. In his scheme to defraud RIOUX, Woodrome created and submitted by interstate wire communications false and fraudulent documents that contained forged signatures, fraudulent invoices and fake assignment schedules.”
In 2008, Brandon ran an unsuccessful campaign for the Arkansas House of Representatives.