LOS ANGELES — The former operator of a Newport Beach answering service pleaded guilty in federal court Thursday to charges that he swindled two financial institutions out of more than $800,000 and agreed to pay at least $1.8 million in restitution.
John Tyler Hancock VI, 40, had been charged with defrauding four lending institutions of $2.5 million between 1983 and 1985. However, the three mail fraud counts to which he pleaded guilty cover loans from only two of the institutions.
When he is sentenced April 11, Hancock faces a maximum of 15 years in federal prison. He also agreed to pay restitution to all four lending institutions, but the amount was still to be determined. Prosecutors claim that it was $2.5 million, but defense attorney Yolanda Barrera said she believes that the amount was between $1.8 million and $2.1 million.
Hancock obtained the loans by telling the lenders that his firm, American Communications Network, needed telecommunications switching equipment. But prosecutors said he used trumped-up financial statements to obtain the money, then used most of the funds to live lavishly in Aspen, Colo.
American Communications Network was forced into involuntary bankruptcy in September, 1985, prosecutors said.
In pleading guilty, Hancock admitted using false information to obtain a $360,210 loan from General Electric Credit Corp. in Anaheim in January, 1985, and $458,463 from Citicorp Industrial Credit in Canton, Ohio, in December, 1984.
Addressing U.S. District Judge Ferdinand Fernandez, Hancock acknowledged that between 1983 and 1985, "There was approximately $2.5 million borrowed." But he said he made $470,000 in payments on those loans during that period and that three large pieces of telecommunications were actually bought and delivered.
Assistant U.S. Atty. David Scheper said Hancock set up a network of shell entities to convince lenders that he had adequate credit and financial status to back a loan.
The "vendors" Hancock said would be selling him the equipment turned out to be controlled by Hancock, Scheper said. When lenders called the number Hancock provided for credit references, they reached operators at his answering service, who read financial statistics over the telephone from a computer printout given to them by Hancock, Scheper said.
Hancock also submitted financial statements from a nonexistent "accountant," whose address turned out to be a post office box leased by Hancock, Scheper said.