NASHVILLE, Tenn. (WKRN) – Two men have been charged with conspiracy to commit bank fraud in connection with a multi-million-dollar scheme to defraud financial institutions.
The Department of Justice said 47-year-old Mahan (Mark) Janbakhsh of Brentwood, and 51-year-old Steven Piper of Joelton were indicted Monday and arrested Thursday by FBI agents.
The indictment charges Janbakhsh and Piper with conspiring to defraud Capital One and First Tennessee Bank (now First Horizon), five counts of defrauding the financial institutions, five counts of making false statements and over-valuing property and securities for the purpose of influencing these financial institutions, and three counts of making false representations during official proceedings.
Both men are also charged with making false statements under oath. Janbakhsh has also been charged with witness tampering while Piper has been charged with three counts of filing false tax returns.
According to the indictment, Janbakhsh was the majority owner and CEO of America’s United Financial, LLC, and Affiliates, a business comprised of nine used car dealerships and six related finance companies (collectively known as Auto Masters) located in and around Nashville. Janbakhsh also reportedly owned other car, radio, and real estate related businesses, including Plaza Mariachi, an entertainment center and market in South Nashville.
According to the Department of Justice, Piper was a certified public accountant and was the Chief Financial Officer of all the Auto Masters entities and prepared tax returns for Auto Masters and for Janbakhsh personally.
The dealerships reportedly sold used cars and provided car loans in connection with the sales; the car loans were then sold to the related Auto Masters finance companies which ran using a line of credit with Capital One and First Tennessee Bank. To continue operating under the line of credit, Auto Masters was required to submit monthly borrowing base certificates to report the total value of eligible loans, which formed the collateral for the line of credit.
On Oct. 9, 2017, Piper reportedly submitted a borrowing base certificate to Capital One for the period ending Sept. 31, 2017, claiming Auto Masters overstated its collateral by over $33 million. In the certificate, Auto Masters admitted it had drawn over $26.4 million more than it was permitted to draw under terms of the line of credit. Auto Masters then filed for bankruptcy the next week, according to the Department of Justice.
During bankruptcy proceedings, Capital One looked to depose the loan portfolio and collection manager for Auto Masters, but were unable to do so as Piper left the jurisdiction. Bankruptcy officials determined that as of July 31, 2017, Auto Masters overstated its collateral by nearly $37 million, and had drawn over $24 million more than they were permitted to draw.
According to the indictment, Janbakhsh, Piper, and others manipulated Auto Masters’ financial database and sent false reports to Capital One to make it look like there was more collateral than there actually was. The group reportedly made false entries to make delinquent loans appear current and created false loans based on duplicate Vehicle Identification Numbers, vehicles that had been repossessed, vehicles that had been paid off, and using information from customers who had applied for loans, but had been rejected.
Janbakhsh and Piper are accused of falsely testifying during bankruptcy proceedings when they reportedly said they had no knowledge of anyone reporting false information to the lenders and were not involved in the scheme.
The indictment also said Janbakhsh participated in witness tampering with the intent to disrupt the federal investigation; he reportedly gave the former Auto Masters portfolio manager $10,000 in cash and promised him an additional sum of about $300,000 if he would leave the jurisdiction to prevent him from providing information about the fraud scheme to federal agents.
Piper is also accused of submitting false individual income tax returns for the tax years 2016, 2017, and 2019 where he underreported his personal income.
If convicted, Janbakhsh and Piper face up to 30 years in prison and a $1 million fine.