4 face federal bank, wire fraud charges

Shawano, Oconto men among those involved in home remodeling scheme
Kevin Murphy

A Shawano man, an Oconto man and a De Pere couple continue to fight federal wire and bank fraud charges in connection with a home remodeling business that allegedly attempted to bilk $1.5 million from customers.

Jeffrey M. O’Brien, 33, of Shawano, Nathaniel R. Smith, 39, of Oconto, and Chad M. and Gina L. Schampers of De Pere, 38 and 36, respectively, were named in a 10-count indictment filed Feb. 1, 2022, which alleged conspiracy to commit wire and bank fraud. They all have plead not guilty to the charges.

According to the U.S. Attorney’s Office, the four defendants operated and worked at Summit Contracting Inc., a home remodeling business. They are alleged to have induced customers to “unwittingly” apply for high interest financing and signed forms that their remodeling projects had been completed.

It is also alleged that, contrary to the financing terms, the defendants withdrew funds from customer accounts before beginning any work or, in some cases, even before ordering building materials.

This alleged fraud resulted in a loss to customers of $1.5 million.

The defense attorneys have unsuccessfully tried to get the indictment dismissed contending that at most the government has accused their clients of attempting to deceive customers to hire Summit instead of another contractor.

Absent any allegation that they took the money without completing the work, the defense contended, fails to alleged fraud and the indictment should be dismissed.

Such, “deceptive practices would be better handled by the Better Business Bureau than a federal criminal prosecution,” Brian Fahl, Smith’s attorney, wrote the court in behalf of the defendants.

Magistrate Judge Nancy Joseph disagreed and, in her recommendation to District Judge William Griesbach, concluded that the indictment alleged an intentional “scheme to defraud.” That scheme included using false statements to get customers to use Summit to do their remodeling work and finance it through Summit’s favored financiers.

The defendants encouraged their customers “to lie to the financiers about their financial situation,” in order to obtain the loans and then withdrew the funds “without completing the projects,” Joseph wrote.

The defense attorneys claimed that Joseph erred in reading into the indictment that the projects were never completed.

In adopting Joseph’s recommendation not to dismiss the indictment, Griesbach wrote that the “indictment could be clearer,” but sufficiently alleges a scheme to defraud.

The judge quotes the indictment “explicitly states that the defendants with the intent to defraud knowingly caused to be transmitted in interstate wire communications … related to the recruitment of customers, financing of home improvement loans, and receiving payment of uncompleted and partially completed projects.”

Griesbach also rejected defense claims that the defendants didn’t commit bank fraud because a financial institution wasn’t directly involved in the loans Summit’s customers obtained. Instead, the indictment stated that GreenSky and EnerBank, were involved and they only offered home improvement loans that actually were funded by other banks, according to the defense.

Griesbach was satisfied that bank fraud charge was adequately supported, noting that the loaned funds were insured by the Federal Deposit Insurance Corp. and that the charge is conspiracy to commit bank fraud and not actual bank fraud.

“That the defendants ‘encouraged’ customers/applicants ‘to misrepresent their annual income to ensure approval of the loan’ reflects the state of mind needed to show an agreement to commit bank fraud, even if it is not enough to show actual bank fraud,” the judge wrote.

The case was set for trial on May 8 but that was vacated and no new trial date has been set as the defendants are challenging evidence the government obtained during a search of Summit’s offices.

The “all-records search warrant” was executed on June 26, 2019, the date Summit planned to hold their ceremonial grand opening, according to documents filed with the court.

The search warrant was supported by an affidavit submitted by FBI Agent Sarah Deamron. Griesbach agreed with the defense’s request to hold a hearing to determine if the agent “lied or recklessly disregarded the truth” in the drafting the affidavit.

That hearing is set for July 27.

The bank fraud conspiracy count carries a statutory maximum penalty of 30 years in prison and $1 million fine. A wire fraud conviction has maximum penalties of 20 years in prison and a $250,000 fine.