Executive Pleads Guilty to $10.5 Million Bank Fraud

[nitpicker]

https://www.justice.gov/usao-edva/pr/executive-pleads-guilty-105-million-bank-fraud

Department of Justice
U.S. Attorney’s Office
Eastern District of Virginia

FOR IMMEDIATE RELEASE
Friday, December 9, 2016

Executive Pleads Guilty to $10.5 Million Bank Fraud

RICHMOND, Va. – Michael P. Klekamp, 67, of Charlottesville, pleaded guilty today to charges of bank fraud that resulted in a $10.5 million loss to Fauquier Bank.

According to court documents, Klekamp was the President of Capitol Components and Millwork, Inc. (CCM), of Culpeper. CCM was involved in the manufacture, fabrication and distribution of architectural building material millwork items for mid to high-end residential and commercial buildings. To run its business, CCM drew money from a standard secured revolving line of credit line at Fauquier Bank. The credit line agreement required CCM to submit periodic reports to the Bank about the value of the underlying collateral, such as accounts receivable and inventory, and the creditworthiness of CCM.

According to court documents, Klekamp fraudulently maintained the credit line by misrepresenting the true financial condition of CCM and made a variety of false statements to the bank about the true amount and quality of the collateral of CCM. On Oct. 25, 2015, Klekamp submitted documents to the bank fraudulently stating there was approximately $17 million of total accounts receivable and inventory securing the bank’s $11.5 million credit line, while in actuality there was no more than $3.4 million of total accounts receivable and inventory. Contrary to the fake financial statements submitted to the bank, CCM was not able to repay the interest or principal amount of the loan, resulting in a loss of approximately $10.5 million as a result of the scheme.
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