Paul Mammorella Pleads Not Guilty to Specialty Filaments Bank Fraud
|U.S. Attorney's Office November 04, 2009|
The Office of the United States Attorney for the District of Vermont announced that Paul Mammorella, 54, of Williston, pleaded not guilty today in United States District Court in Burlington to a charge of bank fraud. U.S. Magistrate Judge John M. Conroy released Mammorella on conditions pending trial, which has not been scheduled.
On October 27, 2009, a federal grand jury in Burlington returned a one-count bank fraud indictment against Mammorella, the former director of finance for Speciality Filaments, Inc., a now-defunct company which at one time manufactured nylon and polyester filaments used as components in industrial and commercial brushes. According to the indictment, Specialty Filaments, which at one time had plants in Burlington and East Middlebury, had a multi-million dollar line of credit with Wells Fargo & Company that was secured by SFI’s inventory and accounts receivables. Under the terms of the loan agreement, SFI could borrow up to a certain percentage of the value of its qualifying inventory and accounts receivables. Mammorella, as finance director, had to prepare and submit to Wells Fargo periodic reports certifying the value of the collateral securing SFI’s loan. Beginning in approximately June 2006, according to the indictment, and continuing through December 2006, Mammorella caused SFI to send Wells Fargo financial reports which falsely inflated the value of the company’s accounts receivables and inventory. This enabled SFI to draw significantly more money from the line-of-credit that it actually was entitled to receive. In early January 2007, SFI went out of business and Wells Fargo discovered that the real value of SFI’s collateral was substantially less than the outstanding loan balance. As a result, Wells Fargo and the Vermont Economic Development Authority, which guaranteed a portion of the loan, lost more than $1 million.
The United States Attorney emphasizes that the charge in the indictment is merely an accusation and that Mammorella is presumed innocent unless and until he is proven guilty.
Mammorella faces up to 30 years of imprisonment and a fine of up to $1 million. The actual sentence in the event of conviction would be determined with reference to federal sentencing guidelines.
The case has been investigated by the Burlington office of the Federal Bureau of Investigation. The investigation is on-going. Mammorella is represented by Paul Volk. The prosecutor is Assistant U.S. Attorney Gregory Waples.