Bank Fraud is Bad

We’re back to fraud at the top this week, but this one is a little different, also $18 million is a lot of money. Norman D’Souza was the CFO of crib and baby furniture company Munire’ Furniture. Munire’s was facing a difficult economic period and they needed to borrow money. The company’s financials weren’t conducive to a borrowing a large amount so D’Souza just made up some numbers inflating sales and accounts receivable. This led to a $17 million bank loan.

This is straightforward bank fraud and I’ll note that bank fraud carries a sentence of up to 30 years in federal prison. Oops.

Around the same time, Munire’ approached the municipality of Gas City, Indiana about a $1 million loan to help build a factory there. D’Souza doubled down here and provided fraudulent financial statements for that loan.

The $18 million in loans wasn’t enough and Munire’ ultimately filed for bankruptcy and defaulted on the loans. At the time of bankruptcy the bank loan had an outstanding balance of $16.99 million.

What’s different here is that there is no indication that D’Souza benefited personally from this fraud, beyond continuing to get a paycheck. Not all frauds are complex. This one is pretty straightforward, lie to the bank, don’t pay back their money.

The lesson is here that loan fraud is still fraud and providing fraudulent financial statements is still fraud, even for a private companies.

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