Michigan Man Sentenced to More Than 20 Years in Prison for Bilking Small Business Owners

April 15, 2010 - PHILADELPHIA—Kenneth Mitan, 51, of Farmington Hills, Michigan, was sentenced today to 262 months in prison for his conviction in a scheme that allowed him and his father, Frank Mitan, to fraudulently gain control of four small businesses and deplete the assets, announced United States Attorney Michael L. Levy. A jury convicted Kenneth Mitan and his father, Frank Mitan, of two counts of mail fraud and two counts of wire fraud. Kenneth Mitan was also convicted of one count of conspiracy, and one count of using a false name in furtherance of mail fraud. Co-defendants Charro Pankratz and Bruce Atherton previously pleaded guilty to their roles in the scheme.

The defendants preyed on small business owners who were interested in selling. Between 2005 and 2008, the defendants obtained a controlling interest in those businesses, failed to pay the agreed-on purchase price, then gutted the companies of existing assets. They diverted those assets into shell accounts so they could then further divert the funds for their own personal uses. The defendants would divert some of the target companies’ funds to other targeted companies. The purpose of these payments was to keep the other companies alive by providing them with just enough money to pay their most pressing bills, and thereby staving off bankruptcy for a few more weeks. Within a few months, the companies were bankrupt, leaving rent, vendors, creditors, utilities, and taxes unpaid.

“Mr. Mitan’s days of defrauding people have come to an end,” said Levy. “He has spent the better part of a lifetime cheating others. Judge Baylson has effectively put an end to his career.”

In addition to the prison term, U.S. District Court Judge Michael M. Baylson ordered Mitan to serve three years of supervised release at the conclusion of his prison term. Mitan has been in custody since December 2008.

The case was investigated by United States Postal Inspection Service and the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorneys Scott M. Cullen and Joe Khan.