A San Diego man was sentenced last week to nearly 3 1/2 years in prison for federal bank and tax fraud after using other people’s personal information to apply for loans.
Alvin Pates, 54, pleaded guilty in federal court last year in a scheme that spanned from July 2014 to April 2020. He admitted in a plea agreement 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 personal gain.
Pates admitted that the total value of the fraudulent loans amounted to $87,000.
Pates funneled most of the loan proceeds through the bank account of a shell company to pay for his and his family’s expenses, as well as make payments to credit unions. During the six years he kept the ruse going, Pates used the money to pay for a penthouse apartment, a Corvette, a Mercedes and a BMW.
He even sent a message to an assistant saying, “money is raining,” according to the sentencing documents.
Pates obtained that money from the straw borrowers under the guise of starting a business. Court records say Pates recruited the straw borrowers from his church. He gained their trust by maintaining an outward appearance of morality and wealth, documents said.
“This case is especially egregious because Mr. Pates didn’t just rely on the faith of his fellow churchgoers, he preyed on it,” said U.S. Attorney Tara McGrath. “But the direct victims are not the only ones who were hurt; we all pay a price for bank and tax fraud when those costs are passed on.”
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, W-2 forms and bank statements he procured. He made it appear that these people earned six-figure incomes from shell companies he operated.
Additionally, he provided the straw borrowers with addresses and phone numbers that allowed Pates and others he directed to confirm the false employment information to financial institutions.
Pates would keep 90 percent of the loan proceeds while the borrowers believed that was their capital contribution to his new business.
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.
At first, Pates made initial loan payments using money from other fraudulent loans. Then, he would default on the loans a few months later, thus ruining the credit and finances of the straw borrowers. Some of these people managed to pay off the loans, but some filed for bankruptcy.
Pates later moved on to another church and continued the scheme under the name “Al Noble.”
During the sentencing hearing on Friday, he was ordered to serve 41 months in prison and to pay restitution of $45,500 to one person who repaid the fraudulent loans.
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.
