Connecticut Man Admits $7 Million Bank Fraud Scheme

NEW HAVEN, CT—Daniel J. Lyons Jr., 54, of Westport, Connecticut, waived his right to indictment and pleaded guilty today before U.S. Magistrate Judge Donna F. Martinez in Hartford, Connecticut to one count of bank fraud related to his defrauding Citizens Bank out of nearly $7 million, announced David B. Fein, U.S. Attorney for the District of Connecticut.

According to court documents and statements made in court, Lyons was the president and chief executive officer of an importing and exporting business known as Greenwich Trading Company GTC Worldwide Inc. or Greenwich Brands LLC (GTC). In February 2007, Lyons applied to Citizens Bank N.A. for a commercial revolving line of credit (RELOC), to be secured by the business’s accounts receivable, in the maximum amount of $7 million. However, Lyons falsified audit reports and other information when he applied to the bank for the RELOC, and again each time he withdrew additional funds from the line of credit.

As part of the scheme, Lyons submitted monthly borrowing base certificates (BBCs) to the bank to draw down additional funds from the RELOC. The BBCs were materially false in that they overstated the outstanding accounts receivable in order to satisfy the bank’s eligibility formula for additional loan disbursements. Between April 2007 and November 2008, Lyons regularly reported to the bank that GTC had between approximately $7.3 million and $9.2 million in accounts receivable.

By November 2008, Lyons had caused GTC to draw down the entire $7 million RELOC loan availability from the bank.

In February 2009, GTC filed a voluntary Chapter 7 bankruptcy petition with the U.S. Bankruptcy Court for the District of Connecticut. In the bankruptcy schedules, GTC’s accounts receivable were valued by Lyons at approximately $380,000.

Lyons is scheduled to be sentenced by U.S. District Judge Robert N. Chatigny on August 10, 2012 at which time Lyons faces a maximum term of 30 years in prison.

This matter is being investigated by the FBI. The case is being prosecuted by Assistant U.S. Attorney Ann M. Nevins.

This case was brought in coordination with the President’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.StopFraud.gov.