WORCESTER – A Marlboro business owner and chief financial officer pleaded guilty Monday in federal court in connection with a scheme to commit bank fraud.
James R. Faro, 61, of Dover, and John J. Crowley, 62, of Boca Raton, Florida, each pleaded guilty to conspiring to commit bank fraud, charges that were lodged in January. U.S. District Court Judge Timothy S. Hillman scheduled Mr. Faro’s sentencing for June 8 and Mr. Crowley’s for June 13.
According to the office of U.S. Attorney Andrew E. Lelling, Mr. Faro is the former owner and president of Sea Star Seafood Corp., a company previously headquartered in Marlboro that distributed frozen seafood products. Mr. Crowley is the former chief financial officer for Sea Star.
The U.S. attorney’s office said that from October 2010 to August 2012, Sea Star maintained an asset-backed loan agreement whereby a bank agreed to loan Sea Star up to $6 million pursuant to a revolving line of credit. Sea Star pledged its assets – most notably its inventory and accounts receivable – as collateral for the loan.
From November 2010 to August 2012, Mr. Faro and Mr. Crowley conspired to intentionally overstate the value of Sea Star’s outstanding accounts receivable that it reported to the bank. By doing so, Mr. Faro and Mr. Crowley fraudulently increased the level of assets against which Sea Star could borrow from the bank, Mr. Lelling’s office said. In August 2012, Sea Star informed the bank it had discovered a “discrepancy” of over $3 million in its reported versus actual assets. Sea Star discontinued its business operations approximately one week later.
Mr. Crowley and Mr. Faro face up to 30 years in prison and a fine of up to $1 million, according to the U.S. attorney’s office. Assistant U.S. Attorney Greg A. Friedholm of Lelling’s Worcester Branch Office is prosecuting the case.