MYRTLE BEACH, SC (WMBF) - Tuesday, a federal judge is expected to decide how much time former Myrtle Beach used car dealer, Howie Lavin will spend in prison for a bank fraud case that shut down one of the area's most popular car dealerships.
Howie Lavin was indicted in 2013 on charges he ran a lucrative check kiting scheme for nearly a decade. It's a case that could involve the biggest financial fraud case in Myrtle Beach history.
It took more than a year for the FBI and federal prosecutors to put together what they now feel is a convincing case against a man who had the trust of thousands of car buyers in Myrtle Beach. He also had the trust of more than a dozen elderly investors who loaned Lavin Cars hundreds of thousands of dollars. But what has proven to be the most shocking trust given to Howie Lavin, the president and owner of Lavin Cars, was the trust of two local banks. Prosecutors say this trust allowed Lavin to steal $10 million.
Prosecutors may never know what he did with the money, but the indictment lays out a scheme that most in the banking industry today would call impossible.
In just one month, Howie Lavin is accused of using two banks to deposit and withdraw more than $300 million in funds that never existed. In check kiting, a bank customer deposits funds from one bank into another, using the lag time between deposits clearing to keep the fraud going, often times skimming funds off the top the whole way. Howie Lavin is accused to keeping this scam going for nearly a decade and in the end, skimming more than $8 million from Crescom Bank and Carolina Trust Federal Credit Union.
Howie Lavin also has a large support network of family and friends. Half dozen of them were at his arraignment in Florence.
And as unlikely as is seems, not one other person who helped run Lavin Cars has been named in the indictment: not his brother who was the vice president of Lavin Cars, not his now-deceased father who ran the business, and not his wife, or any other former employees.
Despite Lavin's silence after his arraignment, his attorney insists Howie Lavin will admit to everything he's done wrong.
"He has done that," says attorney Tommy Brittain. "He has done that with the people that are charged with investigating it."
In the end, Brittain says Lavin will take the high road. In fact, he calls Lavin a man who has shown great courage. He even calls him honorable - someone who did the right thing in the end.
"But look, you have a choice when wrong has occurred," says Brittain. "Now we move to the second phase and you can stand of the Fifth Amendment, which it is your right to do, and see what people can or can't prove, or you can be honest with the people who are investigating and face up to what's coming."
There's also a group of smaller investors wondering what's coming for them. The Car Group, made up mostly of elderly, past Lavin customers, loaned Lavin Cars more than $350,000 to buy inventory when the banks refused. They too are looking for redemption. Don Harrell had $150,000 tied up in Lavin Cars.
He insists Crescom Bank took Lavin's inventory even though the Car Group had contracts stating those cars were collateral on their loans.
"They are pretty resolute in their determination that they feel like there was no wrong doing done on their part by moving in and confiscating the cars, of which there was over a hundred cars and reselling them to try and recover part of their losses," says Don Harrell.
Did Crescom even know the Car Group existed, when they repossessed the cars? Harrell says absolutely. He says the folks at Crescom were using the investment notes from Howie Lavin's dealership as collateral on a second loan from the bank.
"The bank knew about its existence, they took it," Harrel says. "One man borrowed well over $100,000 and turned over his Lavin notes as collateral."
Crescom may have lost millions to Lavin, but the bank is no longer wasting time with the whole Lavin mess.
"The bank wrote those charges off at the time that it occurred," says Scott Brandon, a Crescom Bank board member.
Gene Connell is the attorney representing the Car Group. Shortly before the federal indictment was handed down, Connell subpoenaed Howie Lavin in hopes of getting confirmation the Car Group investors had a case.
"I wanted Howie Lavin to tell us how the scheme worked, if you will," says Connell. "And then I wanted him to tell us also whether or not he was aware of these liens that were placed in the Secretary of State's office in Columbia."
The federal indictment closed that door. But it has opened an opportunity for Howie Lavin to pay back the money prosecutors claim he stole - all $8 million of it. Not going to happen, according to Tommy Brittain.
"No. No sir. Absolutely not," Brittain says. "I don't think there's any way for that to happen."
If guilty, his cooperation would in turn go a long way toward reducing a federal prison sentence. However, his apparent inability to pay back what prosecutors say he stole could also cost him dearly.
Howie Lavin's attorney insists there's no secret Swiss bank account waiting for Lavin. He says in the end, the case will show that whatever Lavin did wrong, it was for the good of his company, his reputation and those he employed. Right now, he's facing 30-years in the Federal pen.
WMBF news crews will be at the court house for the sentencing. Stay tuned for the live, local, late-breaking details.
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