Five plead guilty in Arizona boat-loan fraud - Trade Only Today

Five plead guilty in Arizona boat-loan fraud

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Five defendants pleaded guilty in federal court this week to defrauding banks of $5.4 million in a conspiracy involving the Surfside Boat Center, a high-end boat dealership in Mesa, Ariz., that is now defunct.

The defendants are David Orville Allen, 57, now residing in Texas; David’s brother, Jeffrey Allen, 56, of Mesa; David’s sons, David Brooks Allen, 34, of Gilbert, and Christopher Allen, 32, now residing in Idaho; and Matthew Ulrich, 43, of Mesa, according to reports.

The charges stem from the defendants’ use of the boat dealership, which the Allen family owned from May 2001 until it went into bankruptcy in late 2008, to fraudulently obtain millions of dollars in purchase loans from banks.

More than 50 loans from 11 lenders were represented to be for legitimate boat sales, but were instead for straw sales, and the defendants put the funds to personal use. The defendants ultimately defaulted on the loans.

The defendants pleaded guilty to charges of conspiracy, bank fraud and money laundering. Under the terms of the plea agreements, all of the defendants face prison terms and must repay the loan balances to the banks.

“This scheme was a family affair to rip off banks,” U.S. Attorney Dennis Burke said in a statement. “These defendants sought to get rich by taking out dozens of loans using boats that had either already been sold or used as collateral on other loans and leaving the banks holding the bag.”

All five defendants are set to be sentenced in early August.

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