Remember Peak Performance Motorsports? Now I know among many other reasons why it was so easy for Wachovia Securities to lose so much of my invested IRA dollars they USED to hold. From today's Charlotte paper:
Former Peak Fitness execs charged in federal probe
Accused of commercial loan fraud and money laundering conspiracy.
By Ely Portillo elyportillo@charlotteobserver.com
Posted: Monday, Jul. 11, 2011
Two former executives of Charlotte-based Peak Fitness, which went bankrupt in 2009, have been charged by federal authorities who allege they fraudulently obtained loans from Wells Fargo and Wachovia. Former owner Jeffrey Stec and former chief financial officer Kenneth Hanley are charged with commercial loan fraud and money laundering conspiracy, according to court documents filed Monday. Peak Fitness, once one of the area's largest gyms, folded two years ago. The business was a victim, executives said, of the recession and leases signed at the height of the real estate bubble. Stec also owned Peak Performance Motorsports, which he used to compete in NASCAR events , the documents say. Prosecutors say they first applied for a fraudulent loan in 2007, shortly after Stec had sold Fitness Management Group, Peak Fitness' parent company. (He bought the company back the following year). The duo wanted to buy a $915,000 condo on Isle of Palms, S.C., in the Wild Dunes private resort area. But they didn't have enough cash on hand to qualify for the mortgage, prosecutors say, partly because of how much Stec had spent on his racing business . So, court documents say, they diverted money from a $590,000 commercial loan from Wachovia into Hanley's personal bank account. The money was only supposed to be used for buying a business property in Greenville, S.C. With $130,000 from the business in a personal account, Hanley applied and was approved for an $856,000 loan from Wells Fargo. Days later, the documents say, he transferred almost all of the money back to the business accounts. Stec was listed as a tenant-in-common at the Isle of Palms condo. However, the mortgage payments weren't kept up, and the condo was later sold in a short sale in lieu of foreclosure. Wells Fargo lost about $230,000, prosecutors say. According to the documents, Stec also obtained three more loans, worth a total of $3.8 million, from Wachovia in 2007 and 2008. Stec wasn't the owner of Fitness Management Group at the time, but represented himself as such and said the business would serve as guarantor of the loans. Prosecutors say Hanley supported a fraudulent loan application and "allowed Wachovia to believe erroneously that Stec still owned and could obligate FMG." The loans were supposed to be used for building or upgrading health clubs in Winston-Salem; Kingsport, Tenn.; and Danville, Va. But Stec "diverted the money to various purposes," the documents say. It doesn't specify what Stec spent the cash on, but does say that in the end Wachovia lost about $1.7 million. Stec's attorney declined to comment Monday. Hanley could not be reached. Peak Fitness declared bankruptcy in mid-2009. It had faced hundreds of complaints with the Better Business Bureau over its billing and membership practices. An investment company bought some of the clubs, equipment and memberships. That company opened ZX Fitness at eight Charlotte locations last year Read more: http://www.charlotteobserver.com/2011/07/11/2446688/former-peak-fitness-execs-indicted.html#ixzz1Ru5SEgT3
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"Any Day is Good for Stock Car Racing"
updated by @dave-fulton: 03/14/17 01:34:12AM
