MIDLAND, Texas – A former loan officer at My Community FCU pleaded guilty yesterday to approving $4 million in fraudulent auto loans in return for kickbacks.
Michael Franco was a loan officer with the credit union from May 22, 2006, through Oct. 22, 2008, during which time he approved about 487 fraudulent auto loans for an unnamed car dealership.
Franco dealt with the operator and general sales manager of the car dealership, according to the federal prosecutors, and approved loans worth a total of more than $7 million without verifying loan documents, sometimes even funding a loan before receiving the loan application.
The loan applications “materially overstated or misstated the customer’s income, the value of the vehicle purchased, the customer’s debt-to-income ratio, and/or the customer’s credit score.”
Franco was accused in the document of knowing the loan applications were incorrect, but nevertheless approved the loans while receiving more than $29,000 in kickback payments, according to prosecutors.
The credit union reported losses in excess of $4 million because of the fraud. The $250 million credit union charged off the loans three years ago and has been profitable since then.
Franco pleaded guilty to charges of conspiracy to commit bank fraud and faces up to 30 years in federal prison when he is sentenced.