Mark Yaffe Gave Sovereign Bank Fake Invoices From Fake Clients

Mark Yaffe, 55, Tampa, Florida, has pleaded guilty to one count of conspiracy to commit bank fraud admitting his role in misrepresenting the extent of company collateral to Sovereign Bank in order to borrow $35 million.

The defendant faces a maximum penalty of five years in federal prison. A sentencing date has not yet been set.

According to the plea agreement, Yaffe was vice-president and principal of National Gold Exchange, Inc. (“NGE”), a Tampa-based company in the business of warehousing, retailing, and trading rare coins. NGE entered into a series of loan agreements with Sovereign Bank, whereby Sovereign agreed to lend up to approximately $35 million to NGE, secured by NGE’s assets. Yaffe signed the loan agreements in his capacity as vice-president of NGE.

The loan agreements limited the amount of the $35 million NGE could borrow at any given time, using a formula that considered the value of NGE’s assets, which served as collateral for the loans. To make calculation of the formula possible,NGE was required to submit a monthly “borrowing base report,” along with back-up documents, regarding the value of its assets. The loan agreements also gave Sovereign the right to perform unannounced audits of NGE to verify that NGE had sufficient collateral.

On July 10, 2009, an unannounced audit began at NGE.  In connection with the audit, on July 11, 2009, Yaffe provided members of Sovereign’s audit team with a false and fraudulent borrowing base report, falsely inflating the value of NGE’s assets. In this report, he included fictitious sales to entities that he knew did not exist: $2,221,975 in false sales to Rifkin Management, Inc., (“Rifkin”) and $2,623,308 in false sales to Tudor Trust.

Yaffe also submitted false invoices to Sovereign claiming to prove these fictitious sales and provided to Sovereign contact information for Rifkin and Tudor Trust that was false. An NGE employee reports that Yaffe instructed the employee to lie to Sovereign officials about the fictitious customers and sales. Yaffe then caused approximately $3,049,581 to be transferred out of two NGE bank accounts that were part of Sovereign’s collateral. Under the plea agreement,Yaffe has agreed to forfeit this amount.

United States Attorney A. Lee Bentley, III announced the guilty plea.

This case was investigated by the Federal Bureau of Investigation. It is being prosecuted by U.S. Department of Justice Trial Attorney Timothy Loper and Assistant United States Attorney Rachelle DesVaux Bedke.