Former owners of Rogersville auto dealership indicted

By Kathy Helms-Hughes
STAR STAFF

   A federal grand jury has returned a 47-count indictment against the former owners and operators of a Rogersville automobile dealership.
   Terry Edward Vaughan, 36; Wanda Raley Vaughan, 65; and Edward K. Vaughan, 63, all of Chattanooga; and Sheree Vaughan Kelso, 44, of Morristown are charged with conspiracy, mail fraud, bank fraud, making false statements to banks, and engaging in financial transactions in proceeds of unlawful activity with intent to promote money laundering.
   According to Harry S. Mattice Jr., U.S. Attorney for the Eastern District of Tennessee, FBI Special Agent R. Joe Clark and Special Agent Clayton L. Cooper of the Internal Revenue Service, the defendants, through Raley-Vaughan Motor Co. and others, fraudulently obtained money, funds and credit by making fraudulent applications for automobile loans and receiving the proceeds.
   They also are charged with: engaging in a scheme to defraud General Motor Acceptance Corp. by concealing the sale and encumbrance of automobiles covered by Raley-Vaughan's financing agreement with GMAC to avoid and delay payment to GMAC; depositing non-sufficient funds checks to Raley-Vaughan accounts and other accounts controlled by them in order to fraudulently inflate and create fictitious balances in the accounts -- a scheme commonly known as check-kiting; and using the money, funds and credit unlawfully obtained from banks, lending institutions and GMAC to promote the schemes by making payments to the entities to conceal the fraud.
   The indictment alleges the defendants defrauded GMAC by selling vehicles without paying GMAC, as required under their financing agreement. Raley-Vaughan allegedly concealed sales from GMAC by creating false documents, including bills of sale, to mislead and deceive GMAC and its employees as to when vehicles had actually been sold or encumbered by bringing vehicles which had been sold back on to the lot during GMAC audits and inspections in an effort to mislead GMAC that the vehicles were still part of their inventory.
   The defendants also allegedly submitted false loan documents to First Union National Bank, First Tennessee Bank and First Community Bank bearing forged signatures of actual Raley-Vaughan customers to obtain money for loans the customers had not authorized.
   The indictment sets out 26 false loans or other schemes to defraud banks between November 1994 and January 1997 and also alleges attempts to defraud First Tennessee Bank, First Union National Bank, Bank of East Tennessee (now Union Planters), and Home Federal Bank through check-kiting.
   Between Dec. 1, 1996, and Jan. 30, 1997, the defendants deposited approximately $17.9 million in checks written on accounts that did not have sufficient funds to pay the checks, resulting in daily balances fraudulently inflated by up to $585,000, with First Tennessee and First Union suffering losses of about $244,000. The indictment also alleges the defendants engaged in financial transactions using money obtained from bank frauds and mail frauds to promote the same.
   The defendants made an initial appearance Thursday before U.S. Magistrate Judge Dennis H. Inman in U.S. District Court in Greeneville and were released on bond pending arraignment at 2:30 p.m. Jan. 10, when a trial date will be set.
   The indictment resulted from investigation by the FBI, IRS Criminal Investigation, and the district attorney's office for the Third Judicial District.