Baltimore Man Sentenced in Fraud Scheme with Losses of More Than $600,000
BALTIMORE, MD—Chief U.S. District Judge Catherine C. Blake sentenced Curlee Smittie, age 42, of Baltimore, today to 18 months in prison followed by three years of supervised release for wire fraud in connection with a scheme to defraud his bank and an automobile auction house. Chief Judge Blake also entered an order that Smittie pay restitution of $632,850.24.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.
According to his plea agreement, from April 2008 until January 2009, Smittie fraudulently obtained checks from an automobile auction company by buying cars he already owned, using the company’s short-term credit program.
The company operates auction houses for automobile dealers at locations throughout the United States. Automobile dealers must be registered with the company to buy or sell automobiles at its locations. An individual who wishes to sell an automobile must list the car for sale under the name of a registered automobile dealer. Smittie was registered as a buyer and a seller under the company name Smittie Auto Brokers.
For buyers with an established track record of timely payment, such as Smittie, the company extended short term credit for purchases. Under this arrangement, the company issued a check for the proceeds of the automobile sale to the seller of the automobile on the day of sale. The buyer was allowed to take the automobile, with the promise to pay the purchase price to the auction company within two weeks.
Smittie admitted that he would list an automobile that he already owned for sale under the name of another registered automobile dealer. Smittie then purchased the automobile in his own name or the name of Smittie Auto Brokers, using the auction company’s short term credit program. Thus, Smittie was “selling” the car to himself using the company’s money.
As the person who had listed the car for auction, Smittie accepted the seller proceeds check from the company and deposited those checks into his business checking account. When the time came for Smittie to repay the short term loan from the auction company, Smittie sold another car to himself in the same manner, and used the seller proceeds to pay the previous debt.
As a result of the scheme, from April 2008 until January 2009, Smittie received a total of $2,126,997.50 in seller checks from the auction company and deposited them into his bank account.
In January 2009, employees at the auction company learned of Smittie’s scheme and ordered its bank to stop payment on all checks to sellers from whom Smittie had purchased automobiles. Once all of the checks that Smittie had recently deposited were reversed, the bank was left with a loss of $166,500.16.
When the auction company discovered Smittie’s scheme, Smittie owed the company $702,956.28 for automobiles that he had purchased using the company’s short term credit. The company was able to recover $236,606.20 by repossessing some of the automobiles Smittie had purchased, but was left with a loss of $466,350.08.
United States Attorney Rod J. Rosenstein commended the FBI for its work in the investigation and thanked Assistant U.S. Attorney Jefferson M. Gray, who prosecuted the case.