Preet Bharara, the United States Attorney for the Southern District of New York, announced that NORMAN D’SOUZA, the former chief financial officer and vice president of finance of a New Jersey-based furniture wholesaler and retailer (“Company-1”) and an Indiana-based furniture manufacturer affiliated with Company-1 (“Company-2”) (collectively, the “Companies”), was sentenced yesterday to two years in prison for orchestrating a fraudulent scheme to obtain $17 million in loans from a commercial bank based in New York, New York (the “Bank”), and $1 million in municipal loans from Gas City, Indiana (the “City”). D’SOUZA and his co-conspirators obtained this financing by making false statements and providing false and fraudulent documents concerning the Companies’ financial condition. D’SOUZA pled guilty on April 1, 2016, before U.S. District Judge Ronnie Abrams, who imposed yesterday’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “Norman D’Souza repeatedly misrepresented the financial condition of two companies to deceive a bank and a municipality into lending the companies millions of dollars. He will now spend time in a federal prison for his crimes.”
According to the allegations contained in the criminal information to which D’SOUZA pled guilty, other documents filed in Manhattan federal court, and statements made in court proceedings:
From 2011 until September 2014, Company-1, through D’SOUZA and others, fraudulently induced the Bank into lending Company-1 millions of dollars by repeatedly making false and misleading statements about Company-1’s financial condition. D’SOUZA falsely inflated Company-1’s sales and accounts receivable on “borrowing base certificates” and in financial statements that D’SOUZA provided to the Bank pursuant to loan agreements. D’SOUZA used those falsely inflated sales and accounts receivable to mislead the Bank about Company-1’s true financial performance, which enabled Company-1 to secure and draw down a $17 million revolving credit facility from the Bank. Company-1 ultimately defaulted on the loans issued by the Bank in September 2014. At that time, the outstanding balance of the loans was approximately $16.99 million.
Separately, in 2012, the City offered loans and other financial incentives to Company-2 in return for Company-2’s agreement to operate a furniture factory in the City and employ local residents. To secure this arrangement, among other things, D’SOUZA falsely inflated Company-2’s sales figures in financial statements provided to the City. The false financial statements misled the City about Company-2’s true financial performance and enabled Company-2 to secure and draw down more than $1 million in loans from the City. Company-2 ultimately defaulted on the loans issued by the City in September 2014, causing approximately 60 City residents to lose their jobs. At that time, the outstanding balance of the loans was $1 million/
In addition to his prison term, D’SOUZA, 50, of Monmouth Junction, New Jersey, was sentenced to two years of supervised release, and ordered to pay forfeiture and restitution, both in the amount of $12,256,871.48.
Mr. Bharara praised the outstanding investigative work of the Federal Bureau of Investigation.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Edward A. Imperatore is in charge of the prosecution.
