Pharr auto dealer sentenced in federal fraud case - Brownsville Herald: Local News

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Pharr auto dealer sentenced in federal fraud case

Ordered to pay back more than $975,000 in restitution

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Posted: Friday, September 13, 2019 10:00 am

McALLEN — A longtime local auto dealer accused of defrauding banks in an attempt to generate cash was ordered to pay back nearly $1 million in restitution, sentenced to one year in prison, and another year of home confinement, Thursday, court notes show.

Joe Blackwell, the owner of Auto Sense in Pharr, will serve the first 12 months of a 24-month sentence in prison, while the remaining 12 months will be served under home confinement.

In addition, Blackwell is required to serve three years of supervised release after the completion of his prison term.

Blackwell agreed to a plea agreement with government prosecutors in December 2018, effectively avoiding a trial jury in a case related to allegations of fraud, court records show.

The government indicted the 70-year-old Pharr man Dec. 19, 2017, on a total of 25 counts of fraud — 16 counts of wire fraud, eight counts of mail fraud, and one count of bank fraud in connection with an alleged scheme to defraud banks to obtain credit.

As part of the plea agreement, the government agreed to dismiss count 25 of the indictment, bank fraud.

Blackwell pleaded guilty to count 14 of the indictment, fraud by wire. In exchange, the government agreed to dismiss the remaining 23 counts at the time of his sentencing.

Blackwell came under criminal investigation for allegedly selling contracts that were already used as collateral to procure more than $1.5 million in credit from lenders.

“ (Blackwell) was instructed that he could not sell vehicle installment contracts in order to generate cash flow for Auto Sense Inc.,” the indictment against him read. “These vehicle installment contracts were intended to be used as collateral to secure the final consolidation loan (from Rio Bank).”

A vehicle installment contract is a written agreement between the purchaser and Auto Sense Inc., in which the purchaser agrees to make monthly payments for the purchase of a car.

The government alleged that in November 2012, months after one of his lenders, Rio Bank, delivered its final loan to Blackwell, he initiated a new contract with Irving, Texas-based Strategic Dealer Services, agreeing to sell the vehicle installment contracts in exchange for money, court records show.

Blackwell further indicated there were no liens or claims of encumbrances on the vehicle.

Blackwell also sold vehicle installment contracts to Southlake, Texas-based Peritus Capital Partners LLC, the indictment stated.

In all, the government believes Blackwell’s criminal conduct caused victims to lose “at least $500,000,” court records show.

As part of the plea agreement Blackwell signed, he will be ordered to pay restitution to all of the victims involved immediately.

“ ... The court will determine the amount of restitution to fully compensate the victims,” the document stated. “(Blackwell) agrees that restitution imposed by the Court will be due and payable immediately and that (Blackwell) will not attempt to avoid or delay payment.”

As part of the agreement, Blackwell must begin making monthly restitution payments, beginning in December, to three entities, Peritus Portfolio Services, which is set to receive $218,159.24, Strategic Dealer Services, set to receive $81,660, and Rio Bank, which Blackwell must pay $678,540.69, the record shows.

Blackwell, who has been free on a $50,000 bond since last December, will remain on bond pending his self surrender date, scheduled for Oct. 17, records show.

lzazueta@themonitor.com

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