A developer in Floyd County took part in a scheme to get bank loans using his daughter as a front, with the help of loan officer, a federal grand jury has charged.
Paul D. Fannin allegedly used at least some of the money he received through the alleged fraud to pay a casino.
The indictment named Fannin, owner and developer of Stone Crest Properties in Prestonsburg; his daughter Chelsea Stone; and Brent M. Lee, an officer at the Branch Banking & Trust office in Pikeville.
Fannin had received several loans through BB&T for business ventures, but in September 2014, the bank downgraded its relationship with Fannin, meaning Lee couldn’t loan him additional money, according to the indictment and other court records.
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After that, Lee processed loans from BB&T in 2014 and 2015 totaling nearly $250,000 that named Stone as the borrower, when all three knew that the money was for Fannin, the indictment charged.
Lee also had an agreement drawn up saying that Stone had a certificate of deposit at a West Virginia bank to stand as collateral for BB&T, but Lee knew that wasn’t true, the indictment said.
Fannin, Lee and Stone are charged together with conspiracy to commit bank fraud. Fannin also is charged with defrauding BB&T with help from Lee, and with engaging in transactions using fraudulently obtained money.
That charge alleges that Fannin sent three checks totaling $20,000 to Caesars Riverboat Casino from the money he received through the fraudulent loans.
In addition to conspiracy, Lee is charged with misapplying the bank’s money and submitting loan documents with the intent to defraud the bank.
Stone is charged with making false statements.
The indictment seeks a judgment of $248,368 from the three, representing the gross proceeds of the alleged fraud.
The most serious charges in the indictment are punishable by up to 30 years in prison.