SAN JOSE – 19 September – LAWFUEL – The Law News Network – The United States Attorney’s Office announced that a federal grand jury in San Jose has charged Bruce Martin LaBelle, 49, of Los Altos, California, with bank fraud, false statements to a financial institution, and conspiracy in connection with the Silicon Valley Bank account of a now-defunct Santa Clara factoring company.
The indictment, which was returned on September 7, 2005, was unsealed today upon Mr. LaBelle’s initial appearance this afternoon before U.S. Magistrate Judge Howard Lloyd. Mr. LaBelle was released on a $50,000 secured bond and ordered to appear before Judge Lloyd on October 6, 2005 at 9:30 a.m.
According to the indictment, Mr. LaBelle and one of the operators of the factoring company, Bean Factoring, Inc., submitted financial statements containing false information regarding the factoring company’s assets to Silicon Valley Bank in order to fraudulently maintain an ongoing line of credit that reached $4.2 million during the course of the scheme.
In particular, the indictment alleges that Mr. LaBelle owned and operated two South Bay machine shops, LaBelle Machine Services (“LMS”) and Advanced Manufacturing Concepts (“AMC”), in the late 1990’s. LMS and AMC were affiliated companies which sold accounts receivable to Bean Factoring in exchange for financing from Bean Factoring. LMS and AMC were Bean Factoring’s largest clients. Between 1992 and 1998, Bean Factoring regularly borrowed money from Silicon Valley Bank through a revolving line of credit. In 1997, Silicon Valley Bank increased Bean Factoring’s line of credit to $4.2 million based upon financial statements submitted by Bean Factoring to Silicon Valley Bank regarding Bean Factoring’s assets, including statements regarding its current ratios and accounts receivable balances. These balances included information regarding the accounts receivable Bean Factoring had purchased from LMS and AMC, the companies owned by LaBelle.
According to the indictment, between 1995 and 1998, LaBelle fraudulently “rebilled” (that is, reissued) outdated, uncollected invoices from LMS and AMC with new numbers and dates on the invoices, to make them appear as if they were current, separate invoices, all the while knowing that these “rebilled” invoices were false and fraudulent. LaBelle and a Bean Factoring officer allegedly created and maintained false delivery receipts for the “rebilled” LMS and AMC invoices. LaBelle and the officer also allegedly created false LMS and AMC invoices and purchase orders. The officer from Bean Factoring, with defendant LaBelle’s knowledge, knowingly submitted to Silicon Valley Bank base certificates and compliance certificates containing false statements regarding Bean Factoring’s current ratios and accounts receivable balances in an effort to maintain and expand Bean Factorings borrowing base with the bank.
Mr. LaBelle made his initial appearance in federal court in San Jose on September 15, 2005, and was released on a $50,000 secured bond. The defendant’s next scheduled appearance is on October 6, 2005 at 9:30 a.m. before Judge Howard R. Lloyd.
The maximum statutory penalty for the count of conspiracy to commit bank fraud in violation of 18 U.S.C. § 371 is five years imprisonment, a $250,000 fine, and restitution. The maximum statutory penalty for each count of bank fraud and making false statements to a bank in violation of 18 U.S.C. §§ 1344 and 1014 is 30 years imprisonment, a $1,000,000 fine, and restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
An indictment contains only allegations against an individual and, as with all defendants, Mr. LaBelle must be presumed innocent unless and until proven guilty.
Jeff Nedrow is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Susan Kreider. The prosecution is the result of a five-year investigation by the Federal Bureau of Investigation.