Tuesday, August 16, 2011 5:30 a.m. CDT

http://www.nwherald.com/2011/08/15/man-pleads-guilty-to-bank-fraud-money-laundering/aqlpes7/

ROCKFORD – A Woodstock man Monday pleaded guilty in federal court to charges of bank fraud and money laundering in connection with a $884,000 loan he obtained fraudulently.

Jon C. Shain, 50, pleaded guilty before a U.S. District judge, admitting that he defrauded Amcore Bank, now known as BMO Harris Bank, according to a news release from U.S. Attorney Patrick J. Fitzgerald’s Office.

In November 2004, Shain obtained an $884,000 loan from the bank to start Coating Technologies Inc., a business to coat metal parts, according to court documents.

Shain served as its only officer and director. Loan proceeds were paid to Coating Technologies by the bank based upon fraudulent settlement sheets, invoices and documents proving the purchase of equipment, all provided by Shain, in August 2005.

Among these documents were invoices from Qualified Industrial Services and Industrial Equipment Supply Corp. According to the plea agreement, Shain also was doing business as Industrial Equipment Supply Corp. but used a false address and concealed his ownership to avoid any further inquiries by Amcore.

Shain also admitted that Qualified Industrial Services was a sham used to defraud Amcore, the news release stated.

The plea agreement also states that Shain separately withdrew $68,000 and $90,000 from Industrial Equipment, knowing that it was money derived from the fraudulently obtained loans to buy properties in Rockford in the name of Rock River Reality LLC, an entity he controlled.

The maximum penalty for bank fraud is 30 years in prison and a $1 million fine. Counts of money laundering carry a maximum penalty of up to 10 years in prison and a fine of up to $250,000, according to the news release.

The court also may impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater.

Shain’s sentencing hearing is scheduled for Dec. 2.