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Former Nashville Resident Pleads Guilty to Bank Fraud

U.S. Attorney’s Office October 07, 2009
  • Middle District of Tennessee (615) 736-5151

NASHVILLE, TN—Edward M. Yarbrough, United States Attorney for the Middle District of Tennessee, announced today that on October 5, 2009, Andrew Crutcher, 53, formerly of Nashville, entered a guilty plea in federal court to engaging in a bank fraud that resulted in a loss of $981,661 to the Bank of Nashville.

A criminal information filed by the U.S. Attorney’s Office in July 2009 charged Crutcher with obtaining money and account credit from the Bank of Nashville through a scheme involving fraud and false pretenses. At a hearing held before Chief District Judge Todd Campbell, Crutcher admitted that from May 2005 to February 2006, he had engaged in a combination Ponzi scheme and check kite. The scheme was designed to make it appear as though there were sufficient funds on deposit in Crutcher’s checking account to cover large withdrawals and checks he was writing on the account.

Crutcher, who was then an automobile broker and car salesman, falsely claimed that he was selling hundreds of cars a month – as many as 500 per month toward the end of the scheme – which according to testimony by an agent of the Secret Service who investigated the matter, was a practical impossibility. Crutcher obtained checks which he deposited into the account from people who believed they were providing investment capital for a car sale. To obtain these short term loans, Crutcher represented that he would use the money to purchase a car, and then repay the investors, with interest, from the cash he obtained on reselling that car. In reality, most of the transactions in which Crutcher claimed to be engaging during the above time frame, were fictitious. Crutcher used much of the money he obtained by these false pretenses for personal expenses, and actually repaid investors with money he borrowed in the same way from other investors, and not from proceeds derived from the actual sale of a car. As time went on Crutcher was required to obtain loans more frequently and in ever increasing amounts from his group of investors, in order to cover outstanding checks and withdrawals. He was eventually doing little more than trading checks between himself and these investors, and as a result, the balance of his checking account was artificially inflated. According to testimony at the plea hearing, toward the end of the scheme, more than $10 million dollars worth of checks per month were being deposited into, and almost immediately being withdrawn from Crutcher’s checking account.

The scheme was discovered when one of the investors stopped payment on a large check that Crutcher needed to deposit in order to cover previously issued checks, and the account’s true status was demonstrated. By that time, Bank of Nashville had already honored and paid $981,661 on outstanding checks written on the account, for which there were insufficient funds on deposit.

“When credible evidence demonstrates beyond a reasonable doubt that an offender has obtained money from a local federally insured financial institution through a fraudulent scheme, we will prosecute and seek a sentence that is proportionate with the crime,” said U.S. Attorney Yarbrough.

A sentencing hearing is scheduled for December 14, 2009. Bank fraud is punishable by up to 30 years of imprisonment.

The case was investigated by agents of the United States Secret Service and the Federal Deposit Insurance Corporation, and was prosecuted by Assistant U.S. Attorney Hilliard Hester.

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