Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, February 25, 1995 TAG: 9502270053
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: JAN VERTEFEUILLE STAFF WRITER
DATELINE: LENGTH: Medium
The former president of Hill Brothers mail-order shoe company was sentenced Friday to 24 months in federal prison for his role in a ``straw loan'' scheme. The scheme involved up to 100 people in the Roanoke area who got nearly $1 million in bogus loans from a local banker in the 1980s.
Hoffman also faces a trial on mail-fraud charges involving the shoe company.
The straw borrowers were paid for signing prearranged loan papers and turning the money over to Salem developer Richard Hess, who could not qualify for loans. Hess, who died in 1992, promised these borrowers that he would pay the loans at the now-defunct First Security Bank.
The banker involved in the scam, Thomas E. Hartman, pleaded guilty to conspiracy and bank fraud and helped prosecutors in their investigation. He received only probation.
Hoffman is the only ``straw man'' borrower to be prosecuted so far. The investigation, which began six years ago, is continuing, Assistant U.S. Attorney Tom Eckert said.
What distinguishes Hoffman from the other borrowers, Eckert said, was his hope that by signing the falsified loan applications he could ingratiate himself with Hartman and get loans for his beleaguered Lynchburg company. Hoffman's attorney objected to that characterization.
Hoffman was a savvy businessman who understood finances, Eckert said. ``He was by far the most sophisticated of all the straw borrowers.''
Hoffman got two straw loans through Hartman. A jury in December acquitted him for his involvement in one loan and convicted him on the other, a $23,000 loan. Hoffman kept $4,000 and gave $19,000 to Hess.
Barry Tatel, representing Hoffman, said unlike the other borrowers, Hoffman repaid his loans, totalling around $50,000. Tatel also said there was no difference between the two loans Hoffman got and that his client will appeal.
``I think the jury sort of split the difference,'' Tatel said. ``It was getting late. [They figured], get him on half, let him go on half.''
``This defendant's role is minor compared to Mr. Hartman's,'' Judge Samuel Wilson said in lowering the level of punishment Hoffman had faced. ``This crime would never have been committed had it not been for'' Hartman.
Wilson also sentenced Hoffman to perform 100 hours of community service and to two years' probation on release. He also must make financial records available to a probation officer on request.
by CNB