Developer Sentenced for Misappropriating Loan Funds

admin —  May 1, 2013 — Leave a comment

Vincent J. Garcia, 61, Albuquerque, New Mexico, a real estate developer, was sentenced to 27 months in federal prison followed by five years of supervised release for his bank fraud conviction. Garcia also was ordered to pay $722,543.76 in restitution to the banks that were the victims of his criminal conduct.

Garcia is required to surrender himself to a federal correctional institution to be designated by the U.S. Bureau of Prisons within 60 days to begin serving his prison sentence.

As previously reported by Mortgage Fraud Blog, Garcia pleaded guilty in August 2011 to count three of a 19-count superseding indictment charging him and co-defendants Derek Barnhill, 48, formerly of Rio Rancho, New Mexico, and David Garcia, 36, Albuquerque, with bank fraud and money laundering charges in connection with three real estate development projects, including the Anaszai Downtown LLC (Anasazi Building). In entering his plea, Garcia admitted committing bank fraud in the amount of $365,677 and acknowledged that the gross loss amount to the victims of his fraudulent activity was $842,237.44.

Garcia admitted executing a plan to obtain funding from the Columbian Bank & Trust Co. (the bank) by having Barnhill submit a bank construction loan drawn-down request containing a material misrepresentation. Garcia then used $360,000 in construction loan proceeds to invest in a casino in Washington State. To obtain these funds, Garcia had Barnhill submit a construction loan draw-down request in the amount of $365,677 to the bank on February 12, 2007. The draw-down request falsely stated that the funds were needed for materials and price lock for construction services to be provided by a specific company.

Garcia also admitted instructing Barnhill to draw down the construction loan knowing that the funds would not be directly utilized in the construction of the Anasazi Building. In requesting that Barnhill submit the draw-down request, Garcia knew that the request would falsely represent that the money would be used for a direct construction expense.

In his plea agreement, Garcia stated that his company engaged his son, co-defendant David Garcia, to act as the general contractor for the Anasazi Building and the other real estate development projects and that David Garcia was compensated in the form of labor and materials for construction work on his personal residence. Garcia admitted submitting invoices for work performed on his son’s residence to the bank and to the First Financial Credit Union and manipulated the invoices to appear to be direct expenses for his real estate development projects. Garcia asserted that David Garcia was not aware that the invoices for work performed and labor provided at his residence were being submitted to the banks as direct project expenses.

In December 2010, Barnhill entered a guilty plea to count three, a bank fraud offense, and count ten, a money laundering offense, of the superseding indictment. In his plea agreement, Barnhill provided a more expansive description of the bank fraud to which Garcia entered his guilty plea. To that end, Barnhill said that, on February 12, 2007, Garcia told Barnhill that he needed $360,000 for a good faith payment towards the purchase of a casino. Garcia asked Barnhill to use an old bid for sheet rock for the Anasazi Building to get the money. Barnhill altered the sheet rock bid to support a fictitious draw-down request for $365,677 and submitted the request based solely on the false invoice to the bank.

After the bank disbursed the money, Barnhill transferred the funds to an Anasazi account at New Mexico Bank and Trust. The next day, Garcia and Barnhill went to New Mexico Bank and Trust and withdrew $360,000 of the proceeds and the money at Compass Bank in an account in the name of Albuquerque Downtown Partners. Thereafter, Garcia flew to Washington State with a Compass Bank check for $360,000 to make a payment on the casino. In entering his guilty plea, Barnhill did not implicate David Garcia in the criminal conduct charged in the superseding indictment. The charges against David Garcia subsequently were dismissed.

Barnhill faces up to 20 years of imprisonment, a maximum $1,000,000 fine, and restitution as ordered by the court. He remains on conditions of release pending his sentencing hearing, which has yet to be scheduled.

Garcia’s sentence was announced by U.S. Attorney Kenneth J. Gonzales; Gabriel L. Grchan, Acting Special Agent in Charge of the Phoenix Field Office of IRS-Criminal Investigation; David Anderson, Special Agent in Charge of the Kansas City Region of the Federal Deposit Insurance Corporation (FDIC), Office of Inspector General; and Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI.


This case was investigated by IRS-Criminal Investigation, the FDIC-OIG and the Albuquerque Office of the FBI, and it was prosecuted by Assistant U.S. Attorney Jonathon M. Gerson.


Posts Google+

No Comments

Be the first to start the conversation.

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>