The chief financial officer of a Marlborough business was sentenced earlier this week in federal court in Worcester in connection with a scheme to commit bank fraud.
John J. Crowley, 62, of Boca Raton, was sentenced to three years of supervised release and ordered to pay restitution of $60,000. Crowley and co-defendant James R. Faro, of Dover, each pleaded guilty to conspiring to commit bank fraud in March. Faro was sentenced on Sept. 18 to two years in prison and ordered to pay roughly $1.1 million in restitution.
Faro is the former owner and president of Sea Star Seafood Corp., a company previously headquartered in Marlborough that distributed frozen seafood products. Crowley is the former CFO for Sea Star.
From October 2010 until 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.
Faro and Crowley conspired to intentionally overstate the value of Sea Star’s outstanding accounts receivable that it reported to the bank between November 2010 and August 2012. By doing so, Faro and Crowley fraudulently increased the level of assets against which Sea Star could borrow from the bank. Sea Star informed the bank in August 2012 that 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.
