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TexCrimLawyer, J.D.
TexCrimLawyer, J.D., Lawyer
Category: Criminal Law
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Pre-billing to inflate Borrowing Base with our lender,

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My company controller managed the Borrowing Base with our lender, Greystone. The lending was based upon borrowing against our accounts receivables. We would be allowed to borrow 80% of the value of the product that we shipped to our customers. When the customer paid for the product, it would go into a lock box controlled by the lender, Greystone. They would use that money to pay down the credit line, etc. My controller started to pre-bill the customer shipments thus inflating the amount eligible to borrow. That additional money was used by her to divert money to my former partner, her brother, and another person in the company as well as herself. This activity was discovered by Greystone, my controller quit and I was left holding the bag. This caused Greystone to attack my company and destroy my business. I am already persuing civil avenues against her and my former partner. I have statements from some of the people involved and data clearly showing solid proof of the pre-billing activity as well as a spreadsheet of the pre-billing records so she could keep track of the shippments so she would not accidently bill a customer a second time when the product actually shipped. I worked my way out of the pre-billing mess and shipped all product she had pre-billed. Of course it drained cash from the company. What criminal charges do I have relating to pre-billing. This is obviously a white collar, financial crime and I have found the police lacking.

Submitted: 2 years ago.
Category: Criminal Law
Expert:  Fran-mod replied 2 years ago.
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Expert:  TexCrimLawyer, J.D. replied 2 years ago.

I'm sorry to hear about your situation. I was formerly an Assistant United States Attorney, focusing on white collar crimes, so I have some experience in this area.

So I have this correct, your partner would pre-bill, which the customer would pay, then the payment would be used to pay down the line of credit, which freed up more credit. Your partner would then use that fraudulently freed up credit and divert it to herself and her husband. Is that correct? Do you know if Greystone is FDIC insured?

Customer: replied 2 years ago.


The process you have described is correct. The person that prebilled was my controller and the sister of my partner. The credit that was generated was used to inflate the controllers salary as well as pay her brother extra, unearned money.


 


Greystone Business Credit is in New York. Not certain if they were FDIC insured or not.

Expert:  TexCrimLawyer, J.D. replied 2 years ago.
How much money was taken out of the line of credit, and how much was fraudulently pre-billed?
Customer: replied 2 years ago.

Hold on to your hat. A bit more than a million dollars was prebilled in total. This took place over a 4 month timeframe. The total is huge but at any given time it was much smaller and always rotating in and out of the Borrowing Base. It would be prebilled and then shipped a month or so later but the float was always inflated.


 


I have discovered about $28,000 was paid to her brother, about $16,000 to her and about $9,000 to another individual.

Expert:  TexCrimLawyer, J.D. replied 2 years ago.

OK. I did a little research on Greystone, and they do not appear to be FDIC insured, which means there is no bank fraud.

The best criminal charge you have is wire fraud ( http://www.law.cornell.edu/uscode/text/18/1343). Basically, it is a federal crime to use the wires (i.e. wire transfers) to commit fraud. Here, your partner transfered money and had money transfered to fraudulently gain access to a line of credit that would have otherwise not been available. You need to contact the FBI. You can find your local field office here:

http://www.fbi.gov/contact-us/field

TexCrimLawyer, J.D., Lawyer
Category: Criminal Law
Satisfied Customers: 3917
Experience: Experienced in state and federal criminal litigation.
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TexCrimLawyer, J.D.
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