IBJNews

Indiana businessman admits guilt in 2 fraud plots

Back to TopCommentsE-mailPrintBookmark and Share

An Indiana businessman has pleaded guilty to ripping off an Iowa company whose board he led and duping investors in a Colorado firm in separate fraud schemes totaling $2.3 million, federal prosecutors announced Monday.

Lowell G. Hancher of Sheridan, in Hasmilton County, pleaded guilty Friday to one count of wire fraud and one count of securities fraud during a hearing in federal court, the U.S. Attorney's Office in Cedar Rapids announced.

Hancher, who is nicknamed "Bob," has been released from custody pending sentencing, which hasn't been scheduled. He faces a maximum prison term of 45 years.

Hancher founded Commerce Street Venture Firm Inc., which described itself as a private equity firm that invested in small companies in the process of going public. The company abruptly ceased operations in 2010 as Hancher came under federal scrutiny.

In January 2011, Hancher agreed to pay $3 million to settle a civil complaint filed by the U.S. Securities and Exchange Commission without admitting wrongdoing. That settlement covered the two fraud schemes to which he pleaded guilty last week and a third alleging that he manipulated the stock price of a classic car company he founded in Michigan.

In the plea agreement made public last week, Hancher acknowledged that he defrauded investors in Scott Contracting, Inc., a Henderson, Colo.-based asphalt and general contracting company, out of $1.8 million between 2005 and 2010.

Hancher told dozens of investors, including some from Iowa and some who worked for Scott, that he was raising money for a public stock offering but actually used their funds to operate Commerce Street and his other businesses, the document states. After investors raised concerns, he sent them fraudulent email messages promising to return their money to give "a false sense of security and prevent and delay inquiries that might reveal the true nature" of the scheme, it says.

Separately, Hancher acknowledged that he abused his position as board chairman and head of the audit committee to misappropriate more than $500,000 from Cycle Country Accessories Corp., a Spencer, Iowa-based manufacturer of equipment for all-terrain vehicles and golf carts.

Between 2009 and his resignation in 2010, Hancher convinced the company to give him control of more than $507,000 after promising he would use it for a plan to take Cycle Country private through a stock buyback. In reality, Hancher used the money to pay "various personal expenses," including credit card bills and mortgage payments on one of his two homes, the plea agreement states.

To cover up the scheme, Sheridan lied to the board and the company's auditor and created phony bank and brokerage account statements, the plea agreement states. He also signed a false statement filed with the SEC.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  2. If you only knew....

  3. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

  4. The facts contained in your post make your position so much more credible than those based on sheer emotion. Thanks for enlightening us.

  5. Please consider a couple of economic realities: First, retail is more consolidated now than it was when malls like this were built. There used to be many department stores. Now, in essence, there is one--Macy's. Right off, you've eliminated the need for multiple anchor stores in malls. And in-line retailers have consolidated or folded or have stopped building new stores because so much of their business is now online. The Limited, for example, Next, malls are closing all over the country, even some of the former gems are now derelict.Times change. And finally, as the income level of any particular area declines, so do the retail offerings. Sad, but true.

ADVERTISEMENT