Evanston CEO Gets Prison Time For $67 Million Fraud Schemes

EVANSTON, IL — The former Chief Executive Officer of an Evanston-based auto loan company will serve prison time for his participation in a pair of fraud schemes that resulted in $67 million in losses, according to the U.S. Attorney's Office.

From 2015 to 2018, James Collins, CEO of Honor Finance LLC, schemed with others to submit false information to a bank in order to acquire excess funding and avoid posting additional collateral. The false information also increased the amount of funding Collins received from a trust the company established in tandem with the bank.

As a result of the false information and omissions, the bank lost approximately $62 million.

"Collins selected certain vehicle loans for the trust that he knew were delinquent and not eligible to be included in the portfolio because money had already been advanced to those borrowers through improper accounting entries. Collins hid the ineligibility of these loans from the bank, bond investors, and rating agencies," the justice department said in a statement.

In a separate scheme, Collins misappropriated approximately $5.3 million from Honor Finance through a shell company he set up with co-conspirators, authorities said. The shell company, LHS Solutions, was used as a middleman to purchase GPS devices from a third party supplier.

Collins and his partners purchased the GPS devices and sold them to Honor Finance at much higher prices, pocketing the difference. According to the attorney's office, Collins also diverted commissions from the sale of vehicle warranties that should have gone to Honor Finance.

Collins, 55, pleaded guilty to federal mail fraud and stipulated bank fraud and was sentenced to four years in prison on Wednesday. U.S. District Judge Franklin W. Valderrama also ordered Collins to pay approximately $67 million in restitution.