A San Diego man admitted to a federal court that for almost six years he benefited from a fraudulent scheme that involved duping banks for loans and falsifying tax documents.
Alvin Pates, 54, pleaded guilty in federal court last week to charges that he fraudulently obtained bank loans and lines of credit in a scheme that spanned from July 2014 to April 2020. He admitted to using the names, Social Security numbers and credit of straw borrowers — people who conducted the transaction on his behalf — to fraudulently obtain financing for his personal gain.
Pates admitted in his plea agreement that he prepared or directed people to prepare loan and credit card applications using forged financial information backed by false pay stubs, W2 forms and bank statements he procured.
He promised these straw borrowers a 10 percent kickback payment from the loan proceeds in return for using their personal information and credit, while falsely claiming he would take care of all the loan payments. In one instance, the court records say Pates posed as one of the borrowers on a call with a financial institution to land a loan.
In his plea agreement, Pates said he funneled most of the loan proceeds through the bank account of his shell company to make personal transactions, cash withdrawals, fund his and his family’s living expenses, and make payments to other credit unions. Pates admitted that his total loan fraud value is $87,000 and he will be required to pay restitution of at least $40,500.
In addition to the charges of bank fraud, Pates admitted to helping two taxpayers falsify tax returns in 2015. He supplied false Form 1099s to the taxpayer and accompanied the taxpayer to file the fraudulent forms with the Internal Revenue Service. The IRS issued a refund check to the taxpayer for more than $375,000, which was eventually returned to the agency.
According to court documents, Pates chose to represent himself in court. But in November, prosecutors filed a motion asking a judge to reconsider allowing Pates to represent himself in court due to issues during his arraignment and his failure to report to court dates, the motion said.
Pates was charged with bank fraud, which carries a maximum penalty of 30 years in prison, a $1 million fine as well as forfeiting fraudulent funds and paying restitution. He was also charged with aiding and advising preparation of false tax returns, which carries a maximum of three years in prison and a $250,000 fine. Sentencing is scheduled for March 1.
