Massachusetts: James Faro sentenced bank fraud scheme with John Crowley
A Marlborough business owner was sentenced today in federal court in Worcester in connection with a scheme to commit bank fraud.
James R. Faro, 61, of Dover, was sentenced by U.S. District Court Judge Timothy S. Hillman to two years in prison, three years of supervised release, and ordered to pay $1,121,155 in restitution. In March 2018, Faro pleaded guilty to conspiring to commit bank fraud. Faro and co-conspirator John J. Crowley, 62, of Boca Raton, Fla., were charged in January 2018. Crowley has also pleaded guilty and is scheduled to be sentenced on Sept. 24, 2018.
Faro is the former owner and president of Sea Star Seafood Corporation, a company previously headquartered in Marlborough that distributed frozen seafood products. Crowley is the former chief financial officer for Sea Star.
From October 2010 until August 2012, Sea Star maintained an asset-backed loan agreement whereby a bank agreed to loan Sea Star up to $6 million pursuant to a revolving line of credit. Sea Star pledged its assets – most notably its inventory and accounts receivable – as collateral for the loan.
Between November 2010 and August 2012, Faro and Crowley conspired to intentionally overstate the value of Sea Star’s outstanding accounts receivable that it reported to the bank. By doing so, Faro and Crowley fraudulently increased the level of assets against which Sea Star could borrow from the bank. In August 2012, Sea Star informed the bank that it had discovered a “discrepancy” of well over $2.5 million in its reported versus actual accounts receivable. Sea Star declared bankruptcy and discontinued its business operations approximately one week later.
United States Attorney Andrew E. Lelling and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. Assistant U.S. Attorney Greg A. Friedholm of Lelling’s Worcester Branch Office is prosecuting the case.
