Assistant U.S. Attorney Patrick Murray said 48-year-old Gary Frank ran a loan Ponzi scheme in which he tricked lenders into believing that his small company, Legal Coverage Group, was worth a whole lot more than he claimed.
“The company had minimal growth, and then he was having trouble meeting his costs for various reasons,” he explained. “He began in 2006 to begin to make false statements to banks.”
As his hype grew, so did his income.
“He continued to increase the loan amounts year after year, increasing the scope of his lies about the growth of his business.”
Murray said insurance company Prudential was the biggest loser, lending Frank $30 million. Other victims included customers, vendors, even friends and family.
Frank used nearly half of the money to pay off older loans and other debts, but the rest, said Murray, was used to bankroll his new lavish lifestyle.
“He bought some very expensive condos near the river. He also engaged in extensive travel and bought a very expensive engagement ring for his fiance, of $120,000.”
Through his newly gained high-profile status, Frank managed to work his way onto the boards of the Philadelphia Orchestra and Philly POPS.
He pled guilty back in April to several charges, including wire fraud, bankruptcy fraud and money laundering. As part of his sentence, Frank is also ordered to pay nearly $34 million in restitution.