A businessman in the US state of Tennessee has been indicted for participating in a conspiracy that defrauded three banks of more than US$9 million.

According to the indictment, Charles Smith conspired with former Central Bank CEO, Christopher Jerrolds, to obtain fraudulent letters of credit (L/Cs) that the businessman used to obtain loans from another bank.

Unauthorised L/Cs

Smith allegedly received from Jerrolds several Central Bank L/Cs that appeared to be genuine documents authorised by the bank.

But the alleged conspirators concealed the issuance of the L/Cs from Central Bank and the documentary credits were not entered into the bank's records neither was approval for them granted by the bank's board of directors.

Smith used one L/C worth US$2 million as collateral to obtain a loan of the same amount from Wayne County Bank. In obtaining that loan, he allegedly concealed from the bank his true financial condition.

Bad cheques

The businessman, who owned and operated several construction and building materials businesses including Tennessee Material Corporation (TMC), allegedly also deposited insufficiently funded 'bad cheques' into TMC's account at Central Bank to cover overdraft balances.

Smith was allegedly responsible for depositing 161 bad cheques into TMC's account with a total transaction value of approximately US$116 million.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.