Kenwood Managing Director Indicted for Fraud, Conspiracy
|U.S. Attorney’s Office November 16, 2012|
CINCINNATI—A federal grand jury has charged Matt Daniels, 48, managing director for Bear Creek Capital LLC and Kenwood Towne Place LLC (KTP) with conspiracy and fraud for telling a lender that money was being used to develop Kenwood Towne Place but actually diverting the proceeds to other uses including personal enrichment.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Office; Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (RIS) Cincinnati Field Office; and Hamilton County Sheriff Si Leis announced the indictment today.
The 25-count indictment includes one count of conspiracy to commit bank fraud, one count of bank fraud, seven counts of mail fraud, seven counts of wire fraud, eight counts of money laundering, and one count of obstruction.
The indictment alleges that in 2007, Daniels obtained from Bank of America a multi-million-dollar loan necessary to finance construction of Kenwood Towne Place. The lender agreed to disburse the loan proceeds over time through a series of periodic draws. Before obtaining these draws, Daniels agreed to provide truthful and accurate information to the lender concerning the status of the project and the precise manner in which the company intended to spend the money.
Between late 2007 and December 2008, KTP submitted paperwork on several occasions seeking multiple draws. Based on these representations, Bank of America authorized millions of dollars in draws, including an initial disbursement of over $25 million.
“By late 2008 and early 2009, despite having received millions of dollars from Bank of America, KTP effectively stopped work on the Kenwood Towne Place project as KTP had fallen substantially in arrears to numerous subcontractors working on the development,” the indictment alleges. “When the project collapsed financially, Kenwood Towne Place was only partially completed—the office complex only a steel shell towering over Sycamore Township.”
“This indictment is a result of nearly three years of painstaking investigations by agents and analysts of the FBI and IRS, Deputies of the Hamilton County Sheriff’s Office, and attorneys and staff of the U.S. Attorney’s Office,” stated FBI Special Agent in Charge Edward J. Hanko. “It is a true testament to what can be accomplished when agencies commit to working together to ensure justice is done for the citizens of Ohio.”
“When many of the subcontractors ultimately stopped work on the project for lack of payment, Daniels and his confederates continued to make false statements and fraudulent representations to Bank of America in an effort to conceal and prevent detection of the fact that KTP had not spent the bank’s money as promised.”
The indictment also alleges that Daniels committed money laundering by transferring approximately $2,835,161 in funds derived from the bank fraud out of an account held by Bear Creek Capital to either himself or other business entities.
The indictment also seeks forfeiture of any proceeds Daniels received in connection with the alleged fraud, specifically the contents of two investment accounts, the proceeds from the sale of real estate, and three pieces of jewelry.
Darryl Williams, Special Agent in Charge, Internal Revenue Service, Criminal Investigation, Cincinnati Field Office stated, “This investigation cuts to the very core of the current economic crisis our nation faces. Locally, it stopped a steady stream of income for small local businesses and subcontractors who worked on this project.”
Conspiracy to commit bank fraud, bank fraud, mail fraud, and wire fraud are punishable by up to 30 years in prison. Money laundering is punishable by up to 10 years in prison, and obstruction is punishable by 20 years in prison.
Daniels will be summoned to appear at an initial appearance to be scheduled by Senior U.S. District Judge S. Arthur Spiegel, who is presiding over the case.
The case was presented to the grand jury by Assistant United States Attorneys Brent Tabacchi and Jessica Knight following a collaborative investigation by the FBI, IRS, and Hamilton County Sheriff’s deputies.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.