Marlborough biz owner, CFO plead guilty to $6M bank fraud
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Sea Star Seafood Corp.'s former Marlborough location on Bartlett Street.
The former owner and his CFO of a Marlborough-based frozen seafood distribution company have pleaded guilty to scheming to commit bank fraud.
James Faro, 61, of Dover, and John Crowley, 62, of Boca Raton, Fla., owner and CFO, respectively, allegedly overstated the value of their company, Sea Star Seafood Corp., in order to increase the level of assets against which the company could borrow from the bank.
According to the U.S. Attorney’s Office for Massachusetts, the company from October 2010 to August 2012 maintained an asset-backed loan agreement up to $6 million pursuant to a revolving line of credit. The company largely pledged its inventory and accounts receivable as collateral for the loan, but inflated its accounts receivable.
In August 2012, the company informed the bank of a discrepancy of more than $3 million in its reported versus actual assets, and the company discontinued its operations about a week later. The pair weren’t charged until last month.
Faro and Crowley are subject to a sentence of up to 30 years, five years of supervised release and fines up to $1 million. Sentencing is scheduled for Faro and Crowley is scheduled for June 8 and June 13, respectively.
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