Sheryl Gillespie and Dean Austin South Sentenced in U.S. District Court
|U.S. Attorney’s Office May 03, 2013|
The United States Attorney’s Office announced that during a federal court session in Missoula on May 2, 2013, before U.S. District Judge Dana L. Christensen, SHERYL GILLESPIE, age 50, and DEAN AUSTIN SOUTH, age 70, residents of Helena, appeared for sentencing. They were each sentenced to a term of:
- Probation: five years
- Special Assessment: $100
- Restitution: to be determined
They were sentenced in connection with their guilty pleas to conspiracy to commit fraud.
In an offer of proof filed by Assistant U.S. Attorney Bryan R. Whittaker, the government stated it would have proved at trial the following:
Beginning in approximately 2008 and continuing until November 2009, in Helena and throughout the state, GILLESPIE, SOUTH, and others conspired to devise a scheme to obtain moneys, funds, or credits, owned by or under the custody and control of Banner Bank.
During the conspiracy, Superior Propane was based in Helena and owned in part by SOUTH. Superior Propane operated as a wholesale propane company by purchasing propane directly from the refineries and selling the propane to end-users such as retail/convenience stores. Superior Propane transported the propane from the refineries to their customers, but also contracted with other companies to assist them with the transportation of the propane. Texas Propane Energy (TPE), based in Cibolo, Texas, acted as a retail distributor of propane by servicing end-use customers in the southwestern United States. TPE was one of Superior Propane’s largest customers.
SOUTH was the on-site partner of Superior Propane and was also a partner in TPE. GILLESPIE was the bookkeeper for Superior Propane.
Superior Propane relied upon an approximate $7.5 million line of credit from Banner Bank to assist in meeting its expenses such as payroll and other financial obligations including operating expenses and obtaining inventory.
For Superior Propane to obtain access to the line of credit, Banner Bank required monthly reporting to them with a form called a Borrowing Base Certificate as well as an accounts receivable ledger showing Superior Propane’s receivables. Banner Bank required that a certain percentage of Superior Propane’s current receivables be tied to the line of credit before allowing future credit draws to occur. The account receivables were considered current by Banner Bank for a 90-day period. After the 90-day period, the account receivables were not included in the percentage calculation against the line of credit. Because Superior Propane’s actual account receivables would not have allowed access to the line of credit under Banner Bank’s percentage formula, SOUTH and GILLESPIE falsified and caused to be falsified Superior Propane’s account records, thereby allowing access to the line of credit.
In order to execute and accomplish the conspiracy, SOUTH and GILLESPIE, unlawfully and without authorization, “spread” or applied account receivables that extended beyond 90 days to other customer accounts thereby reflecting the balance for these accounts as current when it fact it was not current. Consequently, Superior Propane was able to increase the amount of money, funds, and credit it could draw from Banner Bank.
SOUTH directed other members of the conspiracy, including GILLESPIE, to create Excel spreadsheets reflecting materially false account receivables which were supplied monthly—and sometimes weekly—to Banner Bank. Banner Bank relied upon the representations in these spreadsheets (and other information provided by Superior Propane) when making credit and lending decisions.
Evidence would have shown that GILLESPIE and others, with SOUTH’s knowledge and under his direction, manipulated and modified Superior Propane’s accounting program, QuickBooks, to coincide with and match the false accounts receivables on the Excel spreadsheets. These modifications were made prior to audits performed by independent outside auditors. Additionally, false invoices and shipping documents were created to match QuickBooks and the reports of receivables which had previously been sent to Banner Bank. The materially false accounts receivable records, the QuickBooks accounting records, and the false invoices were relied upon by the auditors.
After the audit, GILLESPIE and others deleted the fraudulent entries from Superior Propane’s QuickBooks accounting system.
GILLESPIE also provided Banner Bank with false addresses of TPE’s customers by providing addresses of TPE’s employees instead of the customer’s actual addresses.
SOUTH then directed and caused TPE employees to sign false accounts receivable confirmations on behalf of TPE’s customers.
The materially false accounting records and fraudulent documentation submitted to Banner Bank caused Banner Bank to extend millions of dollars to Superior Propane to which it would not have otherwise been entitled to receive.
The investigation was a cooperative effort between the Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service.