A former bank manager faces jail for his part in a 2005 scam that included a fraudulent letter of credit (L/C).

Bank Rhode Island lost nearly US$1 million in the scam, which also cost electronics distributors and others millions of US dollars.

Fraud costs

A federal judge will sentence David Carpenter in April after he pleaded guilty last month in a US court.

Carpenter admitted he accepted a bribe in exchange for helping defraud the bank of nearly US$1 million, the amount the bank lost before the fraud was discovered. If the fraud had run its course, it would have cost Bank Rhode Island three times that amount.

Assurances

Carpenter agreed to draft deposit verifications and L/Cs totalling more than US$3 million at the end of 2005 on behalf of an Internet retailer known as Mixitforme.com.

The deposit letters assured other companies that Mixitforme had enough money in its accounts to pay for the goods it ordered while the L/Cs purported to serve as payment guarantees.

Job offer

These documents enabled the Internet retailer to cause a California firm to ship consumer electronics worth nearly US$1.5 million either to the company or to its customers. Mixitforme failed to pay in full for the goods it ordered.

Part of the deal for Carpenter was employment at Mixitforme where, in early November 2005, he landed a US$120,000 a year job as its chief financial officer. The job was to pay him about twice what he made as a bank manager.

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