Three people, including the former president of a Bel Air bus distributorship, have been charged with defrauding the company and several lenders of $3 million by setting up phony deals to finance buses that were never bought.
Richard H. Palmer, 45, formerly of Fallston, faces a maximum penalty of 10 years in prison and a $250,000 fine if convicted of charges of wire fraud, conspiracy, money laundering and tax evasion.
The charges were described in a 22-count Feb. 18 federal grand jury indictment unsealed yesterday in U.S. District Court in Baltimore.
Mr. Palmer turned himself in to FBI agents in Lincoln, Neb., on Monday, according to FBI spokesman Andrew S. Manning.
Also charged were Harvey Keith Smith, 65, and Susan J. Grimm, 32, identified as Mr. Smith's girlfriend. They were arrested Friday at Mr. Smith's Eureka, Calif., home. Ms. Grimm is accused of arranging the financing in 1987 and 1988 by posing as the owner of Mr. Smith's purported bus companies.
Mr. Palmer was president and chief executive officer of Lagusa Inc. of Bel Air when he allegedly agreed to the scam. The indictment alleges that Mr. Smith and Ms. Grimm provided false financial statements to four lenders to obtain $2.97 million, purportedly to buy 12 buses for Mr. Smith's Red Arrow Lines bus company in Palm Beach, Fla.
The couple lived in West Palm Beach when the deals were made, the indictment says.
According to the court papers, Ms. Grimm presented herself as the owner of several of Mr. Smith's companies to conceal his credit history of bankruptcy and tax evasion when obtaining the loans.
She received loans from Charter Financial Corp., Textron Financial Corp., Sogelease Corp. and Signal Capital Corp., which sent money to Lagusa's accounts at First National Bank and the former Equitable Bank in Baltimore.
The couple gave Mr. Palmer $86,000 in cash and other valuables to induce him to go along with the scam, the indictment alleges, and Mr. Palmer then provided fraudulent documents showing the lenders that the buses existed and had been delivered to Red Arrow.
Mr. Palmer, who now lives in Omaha, is accused of transferring $2.5 million of the money to a bank account opened by Mr. Smith and Ms. Grimm in Florida. The couple diverted some of the money to other companies owned by Mr. Smith and used some for their personal benefit, the indictment charges.
The scheme sparked a 1988 federal civil suit between Red Arrow and Lagusa.
Mr. Smith is charged with failing to pay $721,000 in income taxes from the money he received between 1987 and 1988. Ms. Grimm allegedly owes $76,849 and Mr. Palmer $71,137.
The couple are to have their initial appearance in U.S. District Court in California. Mr. Palmer is scheduled to appear in court in Omaha.
All three are to be arraigned in U.S. District Court in Baltimore.