EVANSTON, IL — Federal prosecutors this week unsealed more than a dozen fraud charges against a North Shore businessman who ran a defunct subprime auto loan company.
Already awaiting trial on charges he misappropriated more than $5 million, federal prosecutors alleged the wound up defrauding a bank out of more than $50 million.
Jim Collins, 53, of Evanston, was indicted by a grand jury on 15 counts of bank fraud and two counts of securities fraud in connection with bonds backed by a bundle of subprime car loans.
Collins, the former CEO of Evanston-based Honor Finance LLC, is accused of providing false information to their bank about their loan portfolio in order to maintain funding from a line of credit, according to the charges.
Prosecutors allege that Collins and his company defrauded their bank by giving borrowers extra time or credit for payments they never made — all in order to make it look like the car loans they were securitizing and selling as bonds to investors were meeting credit quality metrics.
The securitization scheme created by Collins and his accomplices was a “house of cards which was doomed to fail, and it predictably collapsed when their scheme unraveled,” according to a Securities and Exchange Commission complaint.
In addition to the 17 felony counts comprising the indictment returned in May and unsealed Monday, Collins has been awaiting trial since May 2020 on 10 counts of mail fraud stemming from an alleged $5.3 million scheme to misappropriate company money.
His two co-defendants in that case, longtime business associate and former Honor Finance Chief Operating Officer Robert DiMeo, 52, of Park Ridge, and their accountant, Michael Walsh, 65, of Evanston, have pleaded guilty in that case and agreed to cooperate with investigators and testify when asked.
According to DiMeo’s August guilty plea, the fraud costs the banks about $54.5 million. Sentencing for DiMeo and Walsh has been postponed until their cooperation with the government is complete.
While on pretrial release in the earlier case, Collins was charged with driving under the influence of alcohol in state court. He pleaded guilty in exchange for a sentence of one year of supervision, 100 hours of community service and a victim impact panel, records show.
The judge in the federal case agreed to his attorney’s unopposed request to remove the electronic monitoring and home confinement conditions of his bond.
“Allegations are not proof,” Terence Campbell, an attorney for Collins, told Crain’s Chicago Business. “Mr. Collins acted appropriately in his dealings with the bank, and we look forward to confronting these claims in court.”
Bank fraud is punishable by up to 30 years in federal prison, while a securities fraud conviction can carry a sentence of up to 20 years behind bars.
Collins is due to be arraigned on the latest charges Monday. A pretrial conference in his mail fraud case is scheduled for Sept. 19, 2023.
