Louisiana Record

Friday, December 13, 2019

ATTORNEY'S OFFICE OF LOUISIANA: French National Indicted For Six Million Dollar Bank Fraud Scheme and for Lying In an Application for U. S. Government Insured Loans

By Press release submission | Aug 6, 2019


U.S. Attorney's Office for the Eastern District of Louisiana issued the following announcement on Aug. 1.

U.S. Attorney Peter Strasser announced that GILES CASSE (“CASSE”), age 49, was charged on July 25, 2019 by a Grand Jury sitting in the Eastern District of Louisiana in a four-count indictment with violating Title 18, United States Code, Section 1344, Bank Fraud and Title 18, United States Code, Section 1014, False Statements to obtain a government insured loan.

In 2000, CASSE, a native of France, started a Houma, Louisiana based company, along with several other individuals, called GMD International which did business as “NOLATEK”. NOLATEK’s business model was the buying of used electronic testing parts, restoring the parts, and reselling them for a profit. CASSE maintained personal control of the company and applied for a series of loans, lines of credit and factoring agreements with banks in Louisiana and Texas. Two of the loans were backed by U.S. Government guarantors, such that if the loans were not repaid, the government was obligated to reimburse the banks up to 80% of the loan.

The indictment alleges two schemes victimizing three banks. The heart of the scheme was an inflated appraisal of NOLATEK’s inventory. CASSE hired an appraisal company to perform the economic evaluations, but CASSE provided undocumented estimates of NOLATEK’s inventory purchase costs. Specifically, the indictment alleges that CASSE fraudulently inflated the value of NOLATEK’s inventory that he provided to the appraiser. The indictment also alleges that although the initial appraisal valued NOLATEK inventory at over $21 million dollars in 2007, that same inventory was sold for approximately $64,000 in 2010.

The indictment further alleges that CASSE, on behalf of NOLATEK, presented an inflated and fraudulent appraisal in a loan guarantee application with the U.S. Department of Agriculture (U.S.D.A) for a $3,000,000 loan at Prosper Bank in Dallas, Texas. The false loan application was executed in Louisiana and transmitted to the Texas bank. NOLATEK defaulted on the loan in 2009. In 2010, the USDA paid $2,107,259 to make good on the loan guarantee. Prosper Bank suffered a loss of $900,000.

The indictment further alleges that in March 2009, CASSE, through another company controlled by him, Test and Measurement Rentals, LLC, obtained a $1,000,000 loan from First NBC Bank in New Orleans (FNBC). This loan was guaranteed by the Small Business Administration, a U.S. Government agency. CASSE again provided the fraudulent and grossly inflated inventory appraisals of the companies controlled by CASSE, as well as fraudulent invoices, as collateral.

CASSE also defaulted on this loan and caused the Small Business Administration to pay $774,041 to FNBC to honor its guarantee. FNBC suffered a loss of approximately $225,000 on the loan.

Finally, the indictment alleges that CASSE, through NOLATEK, entered into a factoring agreement with Gulf Coast Bank in New Orleans in May 2009. Factoring is a financial arrangement whereby a company sells its accounts receivables for immediate cash. In this type of arrangement, the business gets money more quickly and the financial institution gets a verifiable repayment. The indictment alleges that CASSE submitted fraudulent and fictitious invoices to cause Gulf Coast Bank to release money under its care and custody. CASSE presented more than thirty invoices claiming NOLATEK sold $1.3 million dollars of merchandise in July, August, and September 2009. In reality, NOLATEK sold only $17,200 of product in that period. CASSE defaulted on the factoring agreement and Gulf Coast Bank lost $2,000,000 as a result.

If convicted, CASSE faces a maximum term of imprisonment of thirty years per count, a maximum fine of $1,000,000 per count, a supervised release of five years and a mandatory special assessment of $100 per count and restitution to the banks and government agencies.

A Magistrate Judge in the Eastern District of Louisiana issued an arrest warrant for CASSE in 2017. The arrest warrant was forwarded to INTERPOL, which caused a “red notice” to be issued which would cause the arrest of CASSE if he used his French passport in international travel.

U. S. Attorney Strasser reiterated that an indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.

Original source can be found here.

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U.S. Attorney's Office for the Eastern District of Louisiana