BINGHAMTON, NEW YORK -- A credit union in New York State has gone under following a fraud scheme committed by a mother and son from Susquehanna County.
The fraud cost the financial institution $14 million.
The mother and son pleaded guilty to the scheme in federal court in New York Tuesday.
FBI agents discovered that Scott Lonzinski and his mother Laura Conarton, both of Susquehanna County, ran something like a Ponzi scheme to take out $14 million worth of loans. They said the money would be used for Lonzinski's construction business outside Montrose. But, instead, the money was used for the pair's personal expenses.
"We're here today to announce guilty pleas in one of the largest schemes ever prosecuted in our jurisdiction," U.S. Attorney Richard Hartunian said in a news conference Tuesday.
Hartunian along with a team of FBI agents gathered for a news conference in Binghamton, New York, to say they've caught two of the worst white-collar criminals ever in our area.
Lonzinski and Conarton admitted to creating phony bank documents to prove they had the money to pay the loans back.
"They take someone's money and they pay them back some interest. But, in reality they're only paying back a small portion of the funds that were stolen," said FBI agent Cliff Holly.
According to court papers, Lonzinski and Conarton took out ten loans over two years that they said were to be used for Lonzinski's construction business outside Montrose. But, instead, prosecutors say the $14 million went in part to pay for land and a slew of expensive cars.
Eventually, the mother and son held 1/3 of the assets of that credit union, The Broome County Teacher's Credit Union in Binghamton. Officials there had little suspicion, since Lonzinski made all the minimum payments on time.
Lonzinski was even was hired to renovate one of the credit union branches last year.
Prosecutors say the scheme eventually caused the Broome County Teacher's Credit Union to go out of business. And, though about $6 million worth of assets have been seized by the government, much of that loan money will likely never be paid back.
"In cases like this that can be a very difficult prospect. The defendants face significant terms of incarceration," added Hartunian.
Prosecutors say Lonzinski and Conarton will be sentenced in December, and could face 30 years in prison.
We did speak to the attorney representing Scott Lonzinski. He says his client is terribly sorry for what happened and he had every intention of paying back the loans. But, the scheme got too far out of control.