Courts (Credit: MediaNews Group)
Joshua Coleman must also repay $57 million as part of his sentence
An Upper Gwynedd man was sentenced in United States District Court to four years in federal prison, plus three years of supervised release, in connection with a scheme where he defrauded two lenders out of more than $34 million on a $72 million loan.
Joshua Coleman, 39, was charged in August 2023 with four counts of wire fraud from the scheme and later pleaded guilty in September 2023, according to the U.S. Attorney’s Office.
Coleman must also repay $57.239 million.
According to an affidavit, from August 2020 to June 2022, Coleman deceived two into loaning about $72 million to companies owned and controlled by Coleman, who falsely represented to the lenders that the money would be used to purchase insurance companies.
Of the $72 million, Coleman only used about $10.9 million to buy insurance companies. He admitted to using the remaining $61 million to pay for personal expenses, business debts, and other companies that he owned and controlled, prosecutors said.
Specifically, court filings show, despite promising to use the money to buy insurance companies, one day after obtaining approximately $25 million in loan proceeds from one lender, Coleman wired about $20.2 million to two former investment advisor clients of his, and their associated entities, prosecutors said.
In May 2020, Coleman entered into an agreement in which he acknowledged that he used about $20 million of these former clients’ assets without their knowledge or consent and agreed to pay back the debt with interest. In sum, Coleman used most of one lender’s money to repay earlier investors whose money he misappropriated, prosecutors said.
By August 2021, Coleman needed millions of dollars to repay one lender and other business debts that he incurred, and to purchase two actual insurance companies. In or about September 2021, he began to negotiate with a second lender for a loan that authorized him to use loan proceeds to purchase insurance companies, prosecutors said.
Before the loan agreement could become fully effective, the defendant had to provide proof that certain liens had been terminated by November 2, 2021. Coleman provided what purported to be four lien termination forms to the second lender before the November deadline.
Prosecutors said, in truth, all four liens were still in place at the time. Coleman falsified other critical documents, as well, to convince the second lender to enter into the loan agreement and to make disbursements of loan proceeds.
In total, Coleman received about $47.6 million from the second lender. About $10.9 million was used to purchase an insurance company.
The remaining $36.8 million was misappropriated by Coleman, with most of the money spent on unrelated business debts, including about $11.5 million of the second lender’s funds used to repay the first lender, prosecutors said.
“Coleman brazenly lied to his lenders, falsifying documents and forging signatures to help conceal his scheme,” said U.S. Attorney David Metcalf. “Instead of using the funds as intended, he spent most of those millions paying off business debts and for personal expenses. My office will continue to target significant financial crimes like this and prosecute the fraudsters responsible.”
“This sentencing reflects our commitment to holding accountable those who seek personal profit through lies and deceit,” said Wayne A. Jacobs, special agent in charge of the FBI’s Philadelphia Field Office. “Alongside our law enforcement partners, the FBI will continue our pursuit of those who orchestrate and execute complex financial fraud schemes.”
This case was investigated by the FBI and the Federal Housing Finance Agency Office of Inspector General, with the Securities and Exchange Commission (SEC), and prosecuted by Assistant United States Attorneys Anita Eve and Francis Weber.
The SEC also filed civil charges against Coleman.
All suspects and defendants are innocent until proven guilty. This story was compiled using public court records.
