The son of Adesa Inc. co-founder Michael Hockett agreed to plead guilty Monday to federal bank fraud, the same day the charges were brought by the U.S. Attorney for the Southern District of Indiana in Indianapolis.
B. Scott Hockett, 45, faces maximum penalties of 30 years in prison and a fine of $1 million. A sentencing date has not been set.
According to the charges, Scott committed the alleged fraud during a three-year period ending in 2006 while owner of Indianapolis-based Family Management Corp. The company was a wholesaler of used vehicles that operated as Fleetmax.
Adesa is an auto auction company based in Carmel that Scott’s father sold in 1995. The elder Hockett later founded Indianapolis-based Auction Broadcasting Corp., in 2000.
The federal charges allege that the younger Hockett fraudulently diverted funds from lines of credit to buy stock and hid the diversion from the banks by falsifying reports he filed with them.
The falsified reports showed that Fleetmax had more assets to secure the credit than were available, according to the charges. Fifth Third Bank and the former National City Bank issued the credit.
At one point, the reports showed Fleetmax had about $12 million in assets, when it fact it only had $750,000 available, according to the charges.
The banks lost a total of about $2.4 million as a result of the alleged fraud.
This is not the first time one of Michael’s six sons has run afoul of the law.
In 2001, Michael D. Hockett was sentenced for bribery in a federal court in Virginia. He served five months in jail, 150 days of home detention and was ordered to pay a $20,000 fine.
The junior Michael was one of three men implicated in a bizarre plot to blackmail a Suffolk City, Va., councilor into dropping his opposition to a zoning issue. The rezoning would have allowed Michael to relocate his auto auction business from Chesapeake to Suffolk.
The scheme involved an attempt to get photos of the councilor with an exotic dancer who showed up at his insurance office. The plot unraveled when the councilor threw the woman out.
Michael apologized during sentencing for what he called an “idiotic scheme.”
In another case involving the Hocket family, the wife of Michael Hockett in 1997 agreed to pay $60,600 to settle Securities and Exchange Commission charges that she tipped off her brother before Minnesota Power & Light bought 80 percent of Adesa for $162 million. By trading on the information, the brother made $25,500 in illegal profits, the SEC said.