Car dealer gets prison in bank fraud case Scheme was futile effort to save family business

July 26, 1996|By John Rivera | John Rivera,SUN STAFF

The former owner of a Howard County Buick dealership was sentenced yesterday to 17 months in federal prison for devising a bank fraud scheme in a futile attempt to save the business that his family had operated for more than 50 years.

Rea H. "Mike" Keech Jr., 56, was also sentenced to three years of supervised release. U.S. Magistrate Judge Catherine C. Blake left open the possibility of restitution if his financial situation improves during his supervised release.

Keech's daughter, Leslie A. E. Keech, 32, who was the general sales manager of the dealership, will be sentenced this morning for her role in the bank fraud scheme. The Keeches pleaded guilty to bank fraud charges in March.

Keech operated Rea Keech Buick, a dealership that was founded by his father in 1933. The dealership was in the 8400 block of Baltimore National Pike in Ellicott City. It collapsed after falling into bankruptcy in December 1991.

In the last half of 1990, a combination of factors, including the recession and the Iraqi invasion of Kuwait, seriously depressed the dealership's Buick sales, and it fell into financial trouble, court documents said.

By the summer and fall of 1991, the dealership had fallen into debt and had overdrawn its corporate checking account by more than $150,000. Keech, who had bought the dealership from his father, refused to sell it and devised a "float" scheme to keep it from failing.

The dealership received its inventory of Buicks from General Motors Corp. by securing a $3 million line of credit from Pittsburgh-based Mellon Bank. Keech had agreed to pay Mellon Bank once a car was sold, but when the dealership started losing money, he stopped forwarding payments to the bank.

Keech and his daughter concealed the sale of cars from bank officials by altering invoices, hiding the cash receipts journal from inspectors and telling them that cars that had been sold were not on the lot because they were being test driven.

Over the course of a year, the dealership sold more than 70 cars, worth more than $1.2 million, without paying Mellon Bank for them. Bank officials became suspicious, began showing up at the dealership unannounced for inspections and filed a complaint in Howard County Circuit Court in November 1991.

The bank recovered about half what it was owed through the sale of the dealership's assets; Keech still owes $467,478, according to court documents.

Pub Date: 7/26/96

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