CHICAGO (WKRN) — James Collins, the former CEO of a suburban Chicago subprime auto lending company, was sentenced to four years in federal prison on Friday after being convicted of participating in fraud schemes that caused approximately $67 million in financial losses.
Collins, 55, from Evanston, Illinois, was the chief executive of Honor Finance LLC, a company based in Evanston. Between 2015 and 2018, Collins engaged in a conspiracy to submit false information to a bank that provided a $200 million warehouse line of credit to Honor Finance. The fraudulent information allowed Collins to avoid posting additional collateral, thus maintaining continued access to funding that the company otherwise might have been forced to return.
According to the U.S. Attorney’s Office for the Northern District of Illinois, Collins’ actions also increased the amount of funding the company received from a trust established by Honor Finance and the bank to securitize loans and sell them as bonds to investors.
The deception continued when Collins knowingly selected delinquent vehicle loans for the trust that were ineligible because funds had already been advanced to those borrowers through improper accounting. As a result, the bank suffered approximately $62 million in losses.
In addition to the bank fraud, Collins was found to have engaged in a separate scheme to misappropriate $5.3 million from Honor Finance. Collins and his co-conspirators created a shell company called LHS Solutions to act as an intermediary between Honor Finance and a GPS device supplier. Instead of purchasing the devices directly, Collins used LHS Solutions to buy the devices at inflated prices and resell them to Honor Finance, pocketing the difference.
This multi-layered fraud scheme caused substantial losses and prompted the sentencing of Collins, who will now face four years in federal prison for his crimes.
