Prominent Frederick area businessman Mark Gaver was convicted on all ten US charges of bank fraud and money laundering by a jury in US District Court today (Aug 1.) His trial lasted eight days. Gaver fabricated a stream of false and fraudulent financial reports between 2008 and 2016 vastly exaggerating to the Santander Bank his Gaver Technologies Inc (GTI) business revenues to extract loans he had no hope of repaying to the tune of nearly $50m.
As this fraud kept his lackluster GTI business open while he drew $15,000/week for personal expenses he served as the first chairman of the downtown Hotel Advisory Committee, appointed by Mayor Randy McClement in February 2010. In his two years as HAC chairman Gaver set the pattern followed through the end of McClement’s term of operating behind closed doors without the aldermanic liaison or legal staff that normally put checks on City agencies. HAC records were sporadically kept. HAC meetings were not publicly notified or held in open session in contravention of the state Open Meetings Act.
From the news release of the US Attorney’s Office, District of Maryland:
“According to the evidence presented at his 7-day trial, in 1998 Gaver formed GTI, an information technology company based in Frederick, Maryland. Between November 2008 and December 2016, Gaver submitted materially false financial documents to a federally insured bank, including fraudulent audit reports and contract status reports, in order to establish and to obtain successive increases in the line of credit from the lender for GTI. Based upon the false documentation submitted by Gaver, the lender ultimately extended $50 million in financing to GTI. The evidence showed that Gaver diverted a large portion of these fraudulently obtained funds to his own personal use.
“According to the evidence presented at trial, the bank initially approved an $18.5 million line of credit for GTI in August 2009, when it took over the line of credit from another bank that had previously extended a $16.5 million line of credit to GTI. This line of credit was subsequently increased eight separate times between March 2010 and March 2016, growing from $18.5 million to a total of $50 million. On an ongoing monthly, quarterly, and annual basis, and in connection with each request by Gaver for an increase in GTI’s credit line, the bank required GTI to submit specific documentation disclosing the company’s financial performance and condition. The required documentation included audited annual financial statements, quarterly balance sheets, monthly borrowing base certificates, and monthly accounts receivable aging reports. The monthly borrowing base certificates required Gaver to certify the amount of GTI’s outstanding accounts receivable, and were used by the bank to establish a maximum borrowing amount for GTI. Under the terms of GTI’s line of credit agreement with the lender, GTI was only allowed to borrow up to 75% to 80% of the total amount of GTI’s outstanding accounts receivable, and the funds loaned by the bank were only to be used by GTI for business purposes.
“According to testimony at trial, between August 2009 and December 2016, Gaver also submitted Quarterly Contract Status Reports to the bank, which falsely represented that GTI had secured contracts with federal government agencies, such as the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and the National Aeronautics and Space Administration (NASA), or that overstated the amount of GTI’s ongoing contracts with federal government agencies.
“The evidence showed that some of the funds obtained from the lender were used by Gaver to cover regular business expenses and thereby keep GTI open, but Gaver also diverted half of the post-2009 loan proceeds – approximately $15 million – to his own personal use. For example, Gaver used loan proceeds to pay $779,000 for the rental of private planes that he used for non-business purposes, as well as to pay for personal pleasure trips to the Bahamas, France, Germany, Mexico, Jamaica, and the Bahamas. Gaver also used the funds to purchase vacation homes, including a 4,000 square foot condominium with a view of the Gulf of Mexico in Bonita Springs, Florida, that cost $2.275 million. Gaver also used loan proceeds to purchase a 2012 Maserati Gran Turismo; a 2011 Mercedes Benz SL Roadster; and a private membership at an exclusive golf club located in Naples, Florida that cost $285,000.”
Gaver is due to be sentenced November 1.