James Donlan Sentenced for Fraud on Chittenden Bank
|U.S. Attorney's Office September 18, 2009|
The Office of the United States Attorney for the District of Vermont announced that James Donlan III, 55, of Saratoga Springs, NY, was sentenced on September 16, 2009 in United States District Court in Rutland to time served in prison to be followed by one year of supervised release following his guilty plea to a charge of bank fraud. U.S. District Judge J. Garvan Murtha ordered that Donlan pay a $5000 fine.
According to court records, between 1988 and 2002, Donlan was an accountant and later chief financial officer of MacIntyre Fuels, Inc., a Middlebury-based bulk fuel oil distributor throughout New England. Beginning in 1997, MacIntyre received a commercial line of credit from Chittenden Bank that was secured by fuel oil inventory, accounts receivables and other assets. Under the terms of the loan agreement, MacIntyre could borrow up to a certain percentage of the assets it pledged to Chittenden. MacIntyre had to furnish monthly reports to Chittenden itemizing its inventory and other collateral.
Because of the competitiveness of the fuel oil market, profit margins for MacIntyre were thin and cash flow was constantly an operating issue. In April 2002, Chittenden auditors discovered that Donlan, in his capacity as chief financial officer, had been furnishing monthly reports to the bank that contained falsely inflated accountings of MacIntyre’s inventory and accounts receivables. This fraud enabled MacIntyre to borrow several hundred thousand dollars more from Chittenden than it was entitled to under the credit agreement. When the fraud was uncovered, Donlan was fired and MacIntyre made Chittenden whole by pledging additional collateral to secure the loan. Shortly thereafter, MacIntyre Fuels went out of business. In the end, Chittenden did not suffer any financial loss.
This case was investigated by the Burlington office of the Federal Bureau of Investigation. Donlan is represented by Brad Stetler. The prosecutor is Assistant U.S. Attorney Gregory Waples.