A Lathrop, Mo., man has pleaded guilty in federal court to a $1.7 million fraud scheme related to the sale of his business.
Todd Edwin Rood, 46, of Lathrop, waived his right to a grand jury and pleaded guilty before U.S. District Judge Gary A. Fenner on Wednesday, Dec. 6, 2017, to a federal information that charges him with one count of loan application fraud.
Rood is the former owner of Rood Machine & Engineering (RME). By pleading guilty, Rood admitted that he made false statements to the purchaser’s bank about his assets and liabilities during the sale of his business.
Rood falsified documents in 2015 and 2016 outlining the assets and liabilities of his business in a scheme to defraud RME’s buyers and their financial institution. The total loss amount resulting from Rood’s criminal conduct is $1,347,608.
The purchasers agreed to pay $1,975,208 for Rood’s business and borrowed $1,744,000 from United Community Bank (based in Georgia). But for Rood’s false statements, the bank would not have made a $1,744,000 loan because RME’s value, including its business value and real estate, did not support that loan amount. By altering his bookkeeping, Rood inflated his income by approximately $583,827 prior to the sale.
The court will determine restitution at Rood’s sentencing hearing or at a restitution hearing. Under the terms of his plea agreement, Rood must pay the purchasers $262,000 in restitution for their closing costs and cash infusion into RME, which they made in reliance on the information underlying Rood’s false certification to which he is pleading guilty.
Under federal statutes, Rood is subject to a sentence of up to 30 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
