KEATING AND STAMPER SENTENCED TO FEDERAL PRISON TERMS

Fraud Conspiracy at Auto Dealerships Brings Heavy Fines and Terms of Imprisonment

CHARLOTTE, NC - James F. Keating, 42, of Charlotte, North Carolina, owner and operator of FIVE STAR AUTO MALL, Inc., SOUTH BOULEVARD AUTO MALL, Inc., and MONROE AUTO MALL, Inc., was sentenced Thursday to 36 months in federal prison after pleading guilty to a federal bill of indictment alleging conspiracy to commit fraud, United States Attorney Gretchen Shappert announced today. The Honorable Lacy Thornburg, United States District Judge, presiding in U.S. District Court in Statesville, North Carolina, handed down the Keating sentence as well as a number of related sentences.

Robert Stamper, 36, of Charlotte, was sentenced in connection with the same fraud conspiracy. Stamper, formerly General Manager of South Boulevard Auto Mall, Inc., and Keating’s employee, received 24 months in federal prison. In addition to the prison terms, both Keating and Stamper were each ordered to pay restitution in excess of $1.5 million. The prison terms for Keating and Stamper were handed down despite the extensive cooperation provided by these defendants in the investigation of fraud-related activities in the automotive industry, and despite James Keating’s agreement to make full restitution.

“I applaud Judge Thornburg’s tough sentences of these white collar criminals; this represents one of the largest restitution orders in the Western District of North Carolina,” said U.S. Attorney Shappert. Praising the FBI and the Assistant U.S. Attorney who handled the prosecution, Shappert said, “This convoluted fraud conspiracy wreaked havoc for the banking industry and lending institutions who issued loans for auto purchases. Many of the car buyers found themselves falling behind in their loan payments, facing repossession of their vehicle, and dealing with damaged credit as a result of the scheme. Citizens and the business community need to be keen to the myriad of perversions of simple, everyday business transactions which take place right under their noses.” she added.

Keating pleaded guilty in November 2005 to a federal bill of indictment that charged him, along with 30 co-defendants, many of whom were employees of Keating at his auto dealerships, with conspiracy to commit mail fraud, wire fraud, and bank fraud in connection with illegal business practices. Other defendants included individuals who created fraudulent tax-related documents to support false income amounts on car loans. The conspiracy included Keating and a number of employees who would falsify documents, use straw buyers to conceal purchasers’ bad credit histories, and create fictitious sources and amounts of income and employments for purchasers, while endeavoring to persuade the purchasers to participate in the fraudulent tactics whenever possible. When and if prospective purchasers refused to participate in the fraud, Keating and his employees would lie to the purchasers and forge their signatures in order to effect sales.

Shappert warned that these practices may have spread to other dealerships beside Keating’s. “We hope this case sends a message to the automotive industry that it’s time to clean up their act,” Shappert advised.

Nine other individuals who were charged in the same federal bill of indictment were sentenced by Judge Thornburg in U.S. District Court in Statesville on Thursday and Friday:

John Edmonds
One year probation
Restitution of $1,535,370.00

Dennis C. Elliott
One year + one day imprisonment
Restitution of $1,535,370.00

Jackson Goodwin
Two years’ probation/six months’ home detention
Restitution of $1,535,370.00

Shomari F. Hakeem
One year + one day imprisonment
Restitution of $1,535,370.00

George Free
One year probation
Restitution of $1,535,370.00

Pamela Kelly
One year probation
Restitution of $1,535,370.00

Dorothy T. Howze
One year probation
Restitution of $1,535,370.00

Peter Iskander
Two years’ probation/six months’ home detention
Restitution of $1,535,370.00

Richard Ratliff
Two years’ probation
Restitution of $1,535,370.00

United States Attorney Shappert commended the Federal Bureau of Investigation in Charlotte for their professionalism in the 18-month investigation which preceded the filing of the charges. Thirty employees of Keating’s auto malls were indicted along with Keating in July 2005. In addition to the ten employees above, 20 additional defendants have also entered guilty pleas and currently await sentencing. The case is being handled for the government by Assistant U.S. Attorney/Senior Litigation Counsel David A. Brown of the Criminal Division of the U.S. Attorney’s Office in Charlotte.