Wharton Graduate Convicted in $21 Million Bank-Fraud Case

A Wharton business school graduate and former University of North Carolina basketball player who ran a New York holding company was convicted by a jury in a $21 million bank-fraud case.

Courtney Dupree, 42, was found guilty today in federal court in Brooklyn, New York. He was accused of lying about receivables to New York-based Amalgamated Bank to get and maintain the credit line for his Long Island City-based holding company GDC Acquisitions LLC, which owned lighting and furniture dealers.

The trial began Dec. 6 and the jury deliberated for about 5 1/2 hours. Amalgamated realized $16 million in losses because of the crime, according to the government. Dupree was chief executive officer of GDC.

“This is a case about lying to a bank to get money,” Assistant U.S. Attorney David Woll told jurors during the trial. “It is about telling lies over and over again in order to grab millions of dollars of the bank’s money.”

Thomas Foley, 45, a lawyer in Hoboken, New Jersey, who was the company’s outside counsel until he became its chief operating officer, was acquitted today of conspiracy, bank fraud and making a false statement.

“You can never express in words the pressure,” Foley said after he was acquitted. “It’s a difficult process. But everyone told me to have faith in the system.”

Basketball Player

Dupree was found guilty of conspiracy to commit bank fraud, bank fraud and two counts of making a false statement. He faces as many as 30 years in prison on the most serious charge, according to a statement by U.S. Attorney Loretta Lynch in Brooklyn.

Dupree’s lawyer, Roscoe C. Howard of Andrews Kurth LLP in Washington, declined to comment on the guilty verdict. Robert Nardoza, a spokesman for Lynch, declined to comment on Foley’s acquittal.

Dupree played basketball for the University of North Carolina at Chapel Hill and earned a master’s of business administration from the Wharton School at the University of Pennsylvania.

Before starting GDC, he worked at former New York investment bank Lehman Brothers Holdings Inc., Howard said in his opening statement, without elaborating on his position. He was a vice president of investment banking there between 1998 and 2002, according to his LinkedIn page.

Fundraiser

In 2008 at his Broad Street apartment in New York’s financial district, Dupree hosted Valerie Jarrett, an adviser to Barack Obama, for a $1,000-a-ticket fundraiser for the then-U.S. presidential candidate, according to Elle magazine.

Dupree has been in custody since March when he was arrested again on new charges that he schemed to defraud Amalgamated and U.S. District Judge Kiyo A. Matsumoto, who is presiding over the trial, denied him bail. Prosecutors said Dupree took about $331,000 in customer payments to a GDC subsidiary for his personal use. He still faces being tried on that charge.

In the original scheme alleged, in August 2008 several GDC units, with the parent as guarantor, reached an agreement with Amalgamated that allowed them to borrow as much as $21 million, according to the indictment.

Fictitious Sales

The defendants booked fictitious sales, prematurely recognized sales, re-dated sales and failed to reduce receivables after being paid by customers, according to the indictment.

The defendants also tried to get about $5 million in funding from C3 Capital LLC, a private-equity investment firm, by submitting reports that inflated GDC’s accounts receivable, though C3 never gave any money the government said.

“Executives who abuse positions of influence and trust should expect to be investigated and prosecuted to the full extent of the law,” Lynch, the federal prosecutor, said in a statement.

Three former GDC accountants, Emilio Serrano, Irma Nusfaumer and Frank Patello, who all pleaded guilty, testified at the trial for the government. Dupree also took the witness stand in his own defense.

Among GDC’s subsidiaries were lighting distributor JDC Lighting, lighting maintenance company Unalite Electric & Lighting and furniture distributor Hudson Bay Environments Group, according to the indictment.

The case is U.S. v. Dupree, 10-cr-627, U.S. District Court, Eastern District of New York (Brooklyn).

To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court at tweidlich@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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