Mitchell C. Simpson, 42, of Cornelia was indicted Tuesday on charges of making false statements to Cornelia-based Community Bank & Trust.
Simpson owned Universal Chevrolet in Cleveland, which owed millions to CB&T on various loans it could not repay, according to a news release from the U.S. Attorney's Office. Simpson and the dealership could not obtain additional loans because the existing loans exceeded CB&T's lending limits, according to the release.
In order to obtain more funds to keep the dealership afloat, Simpson recruited eight people to obtain new loans on his behalf, according to the prosecution.
These straw borrowers were either employed by Simpson's dealership or were related to someone employed by the dealership, according to the news release. The indictment alleges Simpson paid the straw borrowers $2,500 each for helping him defraud the bank.
"Bank fraud and bank failures have had a devastating effect on many of our communities, and those responsible go well beyond the people who work at the bank," U.S. Attorney Sally Quillian Yates said in the news release. "In this case, the indictment alleges that a major bank customer used his relationships with those who ran a bank to bail him out of his personal money problems. The victims of this alleged scheme include other honest bank customers who lost their main financial institution when the bank ultimately failed."
Robert Randal Jones, who was then executive vice president and chief credit officer at CB&T, knowingly secured the loans for the straw borrowers, which totaled $925,000, according to the prosecution. CB&T failed in January 2010.
Jones was sentenced May 12 to serve 10 years in federal prison for his part in a broader conspiracy to defraud CB&T.
Simpson is charged with one count of conspiracy to make false statements to a federally insured financial institution and two counts of making false statements to the institution. He faces a maximum sentence of five years in prison and a fine of up to $250,000 on the conspiracy charge and a maximum of three years in prison and $1 million fine on each of the other counts.
U.S. Magistrate Judge Susan S. Cole heard the indictment. The Federal Bureau of Investigation and the Federal Deposit Insurance Corp. Office of Inspector General are investigating the case.
Simpson's lawyer, Ed Tolley of Athens, couldn't be reached for comment Tuesday.
Assistant U.S. Attorney Russell Phillips is prosecuting the case.