Brothers Indicted on Bank Fraud Charges

Allison Tussey —  April 13, 2009 — Leave a comment

Otis Ray Hope, 53, Aiken, South Carolina and his brother, Richard Wayne Hope, 51, Denham, Louisiana, both formerly of Hagerstown, Maryland, were indicted and charged with conspiracy to commit and committing bank fraud, in connection with a $1.75 million loan they obtained on behalf of Shiloh Ministries of Hagerstown (Shiloh Company).

According to the three count indictment, from August 2006 through March 2007, Otis and Richard Hope were trustees of the Shiloh Company and at different times served as its president. The Hopes operated the Shiloh Conference and Retreat Center, in a building the Shiloh Company owned, located at 149 North Potomac Street, Hagerstown, Maryland, renovating and maintaining the building and leasing the space to groups for conferences and retreats.

According to the indictment, on September 28, 2006, the Hopes applied for a commercial loan on behalf of the Shiloh Company, in the amount of $1.75 million to refinance the mortgage on the Shiloh Conference and Retreat Center and to release $108,835 being held in escrow by the previous lender for renovations, restoration of the building after a fire on June 21, 2006, and for environmental remediation. In order to obtain approval of the loan, the bank required submission of documentation of the company’s past and current year’s financial statements, minutes from the company’s annual meetings and a corporate resolution authorizing the company to borrow the money.

The indictment alleges that Otis and Richard Hope: falsely represented to the bank that the Shiloh Conference and Retreat Center had reopened for business after the June 2006 fire, when it had not; submitted fraudulent financial statements to the bank overstating the company’s assets and monthly cash flow; submitted a bogus corporate resolution and fraudulent minutes of corporate meetings that never took place in order to give the impression that the Board of Directors and trustees of the Shiloh Company had voted to authorize the application for the loan and to permit Richard Wayne Hope to act on behalf of the company during the application process and at settlement.

According to the indictment, Richard Wayne Hope attended the loan closing and signed the settlement statement, which accounted for $1.75 million in funds from the new lender and a $108,835 credit from the previous lender’s escrow accounts. After paying off the outstanding loan balance and fees owed to the previous lender, the settlement company wired $77,640, the net proceeds of the closing to a bank account controlled by Otis Ray Hope. The indictment alleges that after receiving the loan, the Shiloh Company never made a monthly loan payment and the bank was forced to write off the loan balance and accrued interest.

In a related case, Otis Ray Hope faces charges of tax evasion for failing to report a total of $843,410 in income for the tax years 2001 through 2003, thereby understating the taxes owed by a total of $169,981. That indictment also charges that Otis Ray Hope subscribed to a false application for exemption from federal taxes for Shiloh Ministries, in which Hope claimed that the recipients of the services provided by Shiloh Ministries did not have to pay for them; that the company’s financial support was derived from donations; and that the company conducted worship services. The indictment alleges that in fact, the company charged recipients for its services; the company’s financial support was derived from rental fees and other charges; and the company did not conduct worship services.

“Prosecuting individuals who intentionally omit income is a vital element in maintaining public confidence in our tax system. Filing false tax returns is not a victimless crime. Honest, hardworking Americans pay the price when others choose to evade their tax obligations,” stated C. Andre’ Martin, Internal Revenue Service-Criminal Investigation Special Agent in Charge.

Otis and Richard Hope face a maximum sentence of 30 years in prison for bank fraud and a maximum of five years in prison for the conspiracy. In addition, Otis Ray Hope faces a maximum penalty of five years in prison for tax evasion and three years in prison for subscribing to the false application for exemption from federal taxes. No court appearance has been scheduled for Otis or Richard Hope on the bank fraud or tax charges.

An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.

United States Attorney Rod J. Rosenstein made the announcement and thanked the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation for their investigative work. Mr. Rosenstein commended Assistant United States Attorney Martin J. Clarke, who is prosecuting the case.

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Allison Tussey

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