The United States Attorney for the District of Connecticut announced that Christopher T. Carr, 56, of Fairfield, was sentenced Wednesday, Sept. 5, by Senior United States District Judge Alfred V. Covello in Hartford, to nine months of imprisonment, followed my nine months of home confinement and three years of supervised release, for his role in a scheme to defraud Citizens Bank.
According to court documents and statements made in court, Carr was the president of F&S Oil Company Inc., which was in the business of providing heating oil to residential and commercial customers in the Waterbury area.
As primarily a seasonal business with fluctuating cash flow, with growing cash deposits when prepaid contracts were purchased by customers and declining cash flow as inventory was purchased and delivered, F&S Oil needed access to a banking line of credit to conduct its business on an ongoing basis.
As a result, F&S Oil had a banking relationship with Citizens Bank, which included three outstanding lines of credit or loans secured by the assets, inventory and receivables of F&S Oil.
Citizens Bank would routinely extend funds to F&S Oil under the existing line of credit based, in part, on information provided by F&S Oil in periodic submissions of borrowing base certificates to Citizens Bank.
The borrowing base certificates would itemize F&S Oil’s total gross accounts receivable and would include a listing of the aging of the receivables and a total fuel inventory.
In 2007, F&S Oil sought to construct a local biodiesel plant that, once completed, was projected to be able to produce heating oil with significantly better operating margins than that provided by simply purchasing heating oil from third parties.
F&S Oil funded the construction primarily through its line of credit with Citizens Bank, as well as monies obtained by the prepayment of oil contracts by residential and commercial customers.
During 2007 and early 2008, the biodiesel project ran into unanticipated construction and permitting problems that delayed its completion and significantly increased the cost of construction.
As the biodiesel plant’s construction costs mounted, Carr and others defrauded Citizens Bank into further extending monies under the line of credit by repeatedly falsifying the borrowing base certificates provided to Citizens Bank by overstating F&S Oil’s accounts receivable and inventory.
Through this scheme, Citizens Bank was defrauded of approximately $3.743 million. Judge Covello ordered CARR to pay full restitution. On May 24, 2011, Carr pleaded guilty to one count of bank fraud.
Richard A. Stevens, the owner of F&S Oil, and Dale K. Ciccarelli, a Certified Public Accountant who served as the external auditor for F&S Oil, also pleaded guilty to charges stemming from this investigation. Each was sentenced to five months of imprisonment and five months of home confinement.
This matter was investigated by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. The case was prosecuted by Assistant U.S. Attorney Christopher W. Schmeisser.