Multi-Brand Franchisee Resentenced to 5 Years in Prison, $5.5M in Restitution for Bank Fraud
The Department of Justice, U.S. Attorney Office for the Western District of Missouri, announced last week that a former owner of multiple franchised restaurants was resentenced for a more than $5.5 million bank fraud scheme, increasing his initial one-year, one-day sentence to five years without parole.
Bruce Swisshelm was the owner of Horned Frog Deli, Inc., and Swisshelm Properties, Inc., which owned and developed commercial properties in Springfield and elsewhere, mainly in the restaurant industry. They included Burger King, Macaroni Grill, San Francisco Oven, McAlister's Deli, Ebbett's Field and a Fog City Coffee restaurant.
In July 2015 Swisshelm pleaded guilty to bank fraud and money laundering, and was sentenced to prison on January 22, 2016, for one year, one
day. A year later the government appealed that sentence. The Eighth Circuit U.S. Court of Appeals found the former franchisee violated the terms of his plea agreement and ordered the case to be resentenced.
Swisshelm admitted that he submitted false financial documents to Great Southern Bank in order to receive four commercial loans, totaling $5,592,583, from February to June 25, 2011. The bank relied on the false information provided within the financial statements submitted by Swisshelm when it approved the commercial loans.
Court records show that Swisshelm knew his businesses had lost money for several years and were on the brink of bankruptcy. He then gambled away what little money remained, and Arvest Bank, his original bank, denied numerous requests for extensions on his existing loans and his request for additional financing. Instead of simply declaring bankruptcy or selling off a portion of his assets to potentially preserve a part of his business, Swisshelm perpetrated a multi-million-dollar fraud against Great Southern Bank, the U.S. Attorney Office states.
"Swisshelm intentionally traded on his reputation and deceived officials with Great Southern Bank into believing that his businesses were in good financial heath and he was able to repay these multi-million dollar loans. When asked for his tax documents, he again lied to Great Southern Bank officials and claimed the documents were not complete," the report explains. It adds, "Swisshelm instead submitted financial statements to the bank that claimed his businesses earned a net income of more than $780,000 in 2010. Tax documents submitted by Swisshelm to the Internal Revenue Service revealed those businesses had losses that exceeded $1.8 million in 2010."
Almost immediately after receiving these monies from Great Southern Bank, Swisshelm failed to make even his minimum payment requirements toward the loan. Within approximately 60 days Swisshelm filed for bankruptcy and attempted to have the entire $5.5 million loan excused by the bankruptcy court.
Great Southern Bank officials began investigating the representations made by Swisshelm when applying for his loans. That investigation and a subsequent one by law enforcement determined that nearly every representation he had made regarding his restaurant companies' financial standing were lies. He claimed that his two primary corporations were either making significant profits or had reversed earlier losses and were breaking even. Not only that, Swisshelm also claimed ownership of several restaurants outside the state of Missouri and claimed additional revenue from those businesses as support for approval of his loan request. In truth, both of his corporations and his associated restaurants were losing vast sums of money.
Bruce Swisshelm was represented by Teresa Grantham Fiester; the U.S. Government by Assistant U.S. Attorney Patrick Carney and Acting U.S. Attorney Thomas M. Larson. The case, USA v. Bruce Swisshelm, (15-03071-01-CR-S-BCW Missouri Western District) was investigated by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation.
The U.S. Attorney report states, "At the time his multi-million-dollar loan was approved, his out-of-state restaurants, which he had claimed to Great Southern Bank were making money, had actually been closed, shuttered, or seized by his creditors for outstanding debts owed."
Swisshelm originally had been sentenced by U.S. District Judge Stephen R. Bough. The judge indicated during sentencing that he had been swayed by support for Swisshelm, which included letters from community leaders and a former college football coach and an attorney. The Eighth Circuit panel ordered that Swisshelm be resentenced before a different judge.
The government argued for resentencing telling the court that Swisshelm was a college educated, experienced businessman who had a clear understanding of the dire state of his finances when he asked Great Southern Bank for the nearly $5.6 million in loans. The government's memorandum stated, "Ultimately, this defendant's bank fraud and theft of over $5.5 million accurately represents his character and desperation to maintain the lavish lifestyle that he and his family had enjoyed for many years."