Five Plead Guilty in $5.4 Million Bank Fraud

PHOENIX—Five defendants pleaded guilty on Monday in federal court to defrauding banks out of $5.4 million in a conspiracy involving Surfside Boat Center, a high-end boat dealership in Mesa, Arizona, that is now defunct. The defendants are: David Orville Allen, age 57, now residing in Texas; David’s brother Jeffrey Allen, age 56, of Mesa; David’s sons David Brooks Allen, 34, of Gilbert; and Christopher Allen, age 32, now residing in Idaho; and Matthew Ulrich, age 43, of Mesa, Arizona.

The charges stem from the defendants’ use of the boat dealership, which was owned by the Allen family from May 2001 until it went into bankruptcy in late 2008, to fraudulently obtain millions of dollars in purchase loans from various banks. More than 50 loans from 11 lenders were represented to be for legitimate boat sales but were instead for straw sales, and the funds were put to personal use by the defendants. The defendants ultimately defaulted on the loans. The defendants pled guilty to charges of conspiracy, bank fraud, and money laundering. Under the terms of the plea agreements, all defendants face prison terms and must repay the loan balances to the banks.

“This scheme was a family affair to rip off banks,” said U.S. Attorney Dennis K. Burke. “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. I thank the FBI for their outstanding work on this investigation.”

FBI Acting Special Agent in Charge Robert C. Rudge Jr. added, “The FBI and the U.S. Attorney’s Office are committed to combat bank fraud. Today’s plea agreement illustrates how some individuals will go to great lengths to profit from ill gotten gains. The FBI remains steadfast in bringing those who commit bank fraud to justice.”

A conviction for bank fraud carries a maximum penalty of 30 years in prison, a $1 million fine, or both; a conviction money laundering carries a maximum penalty of 10 years in prison, a $250,000 fine or both; and a conviction for conspiracy carries a maximum penalty of five years, a $250,000 fine or both. In determining an actual sentence, the district judge will consult the U.S. Sentencing Guidelines, which provide sentencing ranges based on the particulars of the offense and the characteristics of the offender. The judge, however, is not bound by those guidelines in determining a sentence.

All five defendants are set to be sentenced in early August before District Judge Neil Wake.

The investigation in this case was lead by Federal Bureau of Investigation with assistance from the Internal Revenue Service. The prosecution is being handled by Monica Klapper, Assistant U.S. Attorney, District of Arizona, Phoenix.