Date: 07-09-2017
Three indicted in alleged bank fraud scheme
Three individuals, including the owner and developer of Stonecrest properties in Prestonsburg, have been Indicted in an alleged bank fraud conspiracy.
An indictment returned Thursday by a federal grand jury alleges that Paul D. Fannin, the owner of the residential StoneCrest Properties development near StoneCrest Golf Course, conspired with Chelsea Stone, his daughter, and Brent M. Lee, a BB&T bank loan officer, to funnel money from loans in Stone’s name to Fannin.
According to the indictment, in September 2014, BB&T had downgraded Fannin’s status, and Lee had been prohibited from giving Fannin any new loans. Shortly after, Fannin and Lee allegedly worked with Fannin’s daughter, Chelsea Stone, to take out a $100,000 loan in Stone’s name that was later deposited into Fannin’s account.
“… Fannin wrote checks payable to himself and made expenditures at casinos, among other things,” the indictment alleges. Three checks from Fannin totaling $20,000 were made out to Caesars Riverboat Casino, the indictment said.
In November of that year, a second loan was taken out in Stone’s name to pay off the first loan, and a loan modification was made in January 2015 to disburse an additional $150,000, the indictment said. All three parties allegedly knew that the money was for Fannin’s use.
According to the indictment, part of the $150,000 was deposited directly to Fannin, but most went to Stone; Stone then allegedly wrote a $135,000 check to her father, again to support his business and personal expenses. Furthermore, a certificate of deposit from a West Virginia bank was used as collateral; Stone did not actually own that CD, and the bank did not approve its use as collateral, the indictment alleges.
Lee has been indicted for bank fraud (aiding and abetting), unauthorized obligation by a bank employee, and theft, embezzlement or misapplication by a bank officer. Fannin was indicted for bank fraud (aiding and abetting) and transactional money laundering. Stone was indicted for making a false statement in a loan application.
In addition, all three were indicted for conspiracy to commit bank fraud.
Fannin’s charge of transactional money laundering carries a maximum penalty of a $250,000 and three years’ supervised release; every other count in the indictment carries a maximum $1,000,000 fine and five years’ supervised release. Those penalties are in addition to any restitution or forfeitures deemed necessary.
Lee, Fannin and Stone have been summoned to appear July 20 at U.S. District Court in Pikeville.
Lee’s attorney, Bernard Pafunda, said Friday that he had not seen the indictment, nor had an opportunity to review it with his client, and would reserve comment until later.
By Aaron K. Nelson
Appalachian News-Express
