Mark Gaver’s trial on federal charges of bank fraud began today in US District Court at 101 West Lombard St in Baltimore (case #RBD-17-0640.) Gaver served as the first chairman of the City’s Hotel Advisory Committee (HAC) appointed by former Mayor Randy McClement eight years ago and set the HAC on its course of dirty behind closed door political and financial machinations that have characterized the project since its inception.
Sole proprietor of Gaver Technologies Inc (GTI) Mark Gaver had offices at 340 West Patrick and at 50 Carroll Creek Way and worked contracts to provide various ‘information technology’ services to federal government agencies.
Gaver’s “massive fraud” in the words of the plaintiff in the civil suit (Case 17-00374-JFM) by Santander Bank consisted of getting the bank to provide him working capital based on vastly exaggerated reporting of the extent of his business. His line of credit started at $18.5m in 2009 and grew to $50m by 2016 when he broke up with his wife Donna. She discovered the fraud while looking to work out her share of the marital assets and reported it to the bank. The bank and other creditors last year foreclosed on the remains of Gaver’s sham businesses in Frederick and seized other assets here and in Florida.
CORRECTION: In my first posting I was under the mistaken impression that the civil suit was won by Santander. In fact it has not been concluded, but put on hold pending the criminal case.
Mode of fraud — copying auditor’s letterhead and fabricating reports
Gaver photoshopped the letterhead of Grant Thornton LLP, a major accounting firm in order to fabricate his fantasy financial reports, presenting them as professionally audited. He fobbed off requests for copies of his federal contracts and field visits to his offices with the claim that GTI work was ‘classified.’ He told Santander most of his firm’s revenues were required by the government to be deposited with the locally owned Woodsboro Bank, explaining why his deposits at Santander were so much smaller than the financial statements suggested. None of GTI’s work in fact was classified, the Santander bank eventually discovered. Gaver also used the divorce proceedings to block the bank’s access to important documents, claiming they were subpoenaed.
The civil suit complaint: “Mr. Gaver obtained the line of credit and increases to the line of credit by submitting to Santander Bank what appeared to be audited financial statements for GTI prepared by Grant Thornton LLP, a recognized and respected accounting firm. These financial statements painted a picture of a company with strong revenue growth and substantial accounts receivable from contracts with U.S. federal government agencies. In fact, these ‘audited’ financial statements were fabricated and forged by Mark Gaver. On information and belief, Grant Thornton has never audited GTI. The ‘audited’ financial statements submitted to Santander Bank grossly inflated the financial performance of GTI.”
The forged audited report for 2008 claimed revenue of $88.6m and accounts receivable of $28m, when the true figures were $5.8m and $0.53m. By the time the fraud was discovered in 2016 GTI was insolvent. Santander previously Sovereign Bank is based in Spain.
Many generations in Frederick
Gaver, 57, comes from a Middletown and Frederick area family going back to 1760, he has claimed, but until his arrest and indictment December 6, 2017 he had been living in Bonita Springs FL, in Canada and Germany. He was placed on a federal watchlist about a year ago and arrested arriving from overseas at BWI November 2017. He has been in federal custody ever since.
The Santander civil case again: “In connection with the Divorce Proceeding, Mrs. Gaver obtained copies of the financial statements for GTI for 2015 that had been submitted by Mark Gaver to Santander. These financial statements appeared to be audited by Grant Thornton LLP, and showed revenue in 2015 of $227 million and accounts receivable as of December 31, 2015 of $77.5 million. When Mrs. Gaver contacted GTI to investigate the value of the company, she learned that the true financial picture of GTI was vastly different from that portrayed in the financial statements submitted by Mr. Gaver to Santander. In fact, GTI had only $5,135,658 in revenue in 2015 and the amount of GTI’s accounts receivable as of December 31, 2015 was only $672,715. In other words, although GTI had some legitimate business, the financial statements submitted by Mr. Gaver inflated GTI’s revenue by a factor of 44 and inflated GTI’s accounts receivable by a factor of 115.”
For an extended period Gaver paid himself $15,000 per week on the Santander bank account of GTI, and spent lavishly on luxury properties, travel and recreation.
The federal criminal charges closely follow the civil complaint with eight counts of bank fraud and two associated changes of money laundering. On the size of the fraud they say that “It was part of the ‘scheme and artifice to defraud’ that Gaver obtained through false and fraudulent means at least $49,215,606.18 in LOC (Line of Credit) funds from Santander, resulting in a corresponding loss to the Bank of $49,215,606.18.”
In preliminary or pre-trial skirmishing Gaver wanted to introduce evidence of negligence on the part of Santander Bank in his defense. His attorney referred to voicemails left by bank officers. US District Judge Richard D. Bennett ruled last week (o7/19) for federal prosecutors in a Memorandum Order saying that Gaver cannot do that: “The Defendant has not indicated how evidence concerning Santander Bank and/or its employees’ negligence, lack of diligence, or knowledge or complicity in the alleged scheme is relevant to whether he committed bank fraud in violation of 18 USC § 1344. As a matter of law, he may not argue that the negligence or actions of any Santander Bank personnel negates his own criminal intent.”
A US Government lawyer working on the case said today she expected it will probably be wrapped up by the court this week. It is a jury trial in which Gaver, potentially, faces many years of jail.
Puff pieces in local media
Gaver was the subject of ‘puff pieces’ in the then-Gazette newspaper and the Frederick News Post when he was named local Executive of the Year by the local Tech Council, and when he chaired the City’s Hotel Advisory Committee.
The Gazette Feb 11, 2010 ran a report headed: “Businessman to lead effort for downtown hotel, conference center, Mark Gaver is ready to bring ‘missing link’ to Frederick.”
They reported: “Gaver said he plans to draw from his years as a businessman, his roots in Frederick, and his community involvement to serve as a ‘shepherd’ of the project, he said.”
The hotel, then to cost $45m, would open “by 2014,” the Gazette reported. 2018/07/23 CORRECTIONS 24th.