Businessmen arraigned

Published 12:00 am Friday, December 3, 2010

South Central Agency associates John Tomberlin and Harold Young will be tried Jan. 20 in Pennsylvania.

The three local businessmen indicted in Pennsylvania last month for their part in allegedly stealing $53 million in a massive loan fraud scheme have been arraigned and will head to trial in January.

John Tomberlin and Harold Young, both associated with Andalusia’s South Central Agency, and John Wiley Spann, a logging equipment dealer, are alleged to have participated in the fraud at the request of officials with Sterling Financial Corp’s Equipment Finance LLC, based in Pennsylvania.

A 15-count indictment accuses the three and five other defendants in Pennsylvania of mail fraud, money laundering and conspiracy in a six-year scheme where they falsified EFI’s books and looted its accounts, causing $53 million in losses.

The three locals also were ordered to forfeit $1,041,452.92.

Patty Hartman of the U.S. Attorney’s Office, Eastern District of Pennsylvania, said Thursday Spann was arraigned on Nov. 29 and Tomberlin and Young on Dec. 1 in Philadelphia. Each man was released on a $50,000 bond.

“At present, I can say that nothing has been forfeited or any assets seized from anyone, and that the judge has set a jury trial date of Jan. 20,” Hartman said. The trial will be held in Philadelphia, Hartman said.

It is alleged that as far back as 2001, the group engaged in a pervasive scheme to steal money by looting the accounts of EFI and falsifying EFI’s books when corporate officials directed other employees to make false entries in EFI’s books, create false documents for EFI’s files and undermine the audit process conducted by the company’s inside and outside auditors.

For his alleged part in the scheme, Spann is accused of helping EFI officials initiate hundreds of bogus loans. For his “services,” the indictment reported Spann paid himself an annual salary using the EFI money.

In order to give the appearance of legitimacy to the bogus loans, the defendants filled company files with false records, which included documentation that falsely showed the equipment was insured and bogus insurance premium invoices.

The indictment states that, at the suggestion of corporate officials, Spann recruited Young, SCA owner, and Tomberlin, who sold his portion of the business to Young in October, to help him raid EFI’s insurance escrow account of more than $1 million by preparing false SCA invoices for insurance premiums. In exchange for their cooperation, Tomberlin and Young were reported to have kept approximately 20 percent of the funds.

Specifically, the indictment lists 25 false invoices issued by the South Central Agency to EFI in amounts ranging from $11,000 to $72,134.

If convicted, the U.S. Attorney’s Office will seek forfeiture of the $53 million from the defendants.