A 49-year-old Post Falls man is among three suspects accused of more than $6 million in bank fraud as a former auto dealership owner.
Roger Spangenberg and his brother, David Spangenberg, 52, Spokane, owned three now-closed D&R auto dealerships formerly located in Hermiston and Enterprise, Ore.
The brothers, along with Steven Johnson, 63, Aberdeen, Wash., who was a manager, appeared in federal court this week in Portland to face conspiracy charges.
"These defendants left a multi-million dollar trail of destruction in eastern Oregon," U.S. Attorney S. Amanda Marshall said.
"Financial fraud results in significant harm both to our financial institutions and our communities, and we will continue to work with our law enforcement and financial institution partners to pursue and prosecute financial fraud aggressively in this district."
All three suspects, who pleaded not guilty, have been released under conditions. A three-day jury trial is set for March 27 before U.S. District Judge Michael H. Simon in Portland.
The indictment alleges that from January 2007 through August 2008, the Spangenbergs and Johnson conspired to defraud KeyBank in connection with a Floorplan Line of Credit and Security Agreement, known in the auto industry as a "flooring loan."
KeyBank extended a line of credit to the D&R dealerships to purchase new inventory, but the Spangenbergs and Johnson allegedly failed to repay KeyBank after they sold the inventory.
The indictment alleges that the Spangenbergs and Johnson deceived KeyBank into believing the dealerships had not yet sold inventory, including asking customers to return recently purchased vehicles to the dealerships to receive a free service on the day of an audit, and misrepresenting to KeyBank that automobiles not present on the lot were being used as rental cars.
The indictment also alleges that the defendants submitted false vehicle identification numbers (VINs) to KeyBank to receive funding for inventory the dealerships never purchased, and that defendants "double floored" vehicles with more than one financial institution.
"KeyBank suffered a loss of more than $6 million as a result of the alleged fraud," an Internal Revenue Service press release states.
Post Falls police and the FBI have assisted the IRS in the case.
Conspiracy to commit bank fraud carries a maximum sentence of 30 years in prison and a $1 million fine.