Former car dealer sentenced to 26 months, $4.3 million restitution

HUNTINGTON  — A former Huntington car dealer will spend the next two years and two months in prison and pay nearly $4.3 million in restitution for defrauding a bank through his credit line.

Frederick G. Davis, owner of Davis Chrysler, received the sentence in U.S. District Court in Huntington Thursday. He pleaded guilty in March to one count of bank fraud and one count of engaging in an unlawful money transaction, stemming from his dealings with Branch Banking and Trust Company (BB&T) between 2001 and 2002.

During that time, Davis used cars his dealership had already sold as collateral to get advances on his credit line from BB&T. When an audit found the cars weren’t on the lot, Davis lied to his creditors, telling them that the cars were out to be sold at auction, according to his plea agreement.

These cars, which were received from a dealership in Ohio without an initial payment and sold before they were ever reported as collateral to the bank, were catalogued with special designations in the company’s books.

“The judge believed the ruling was fair, and he is experienced in sentencing cases. He took into account all of Fred Davis’ actions,” said Troy Giatras, Davis’ attorney.

Phyllis Arnold, president of BB&T’s West Virginia-Central Region, said the bank was not satisfied with Davis’ punishment.

“We were disappointed in the sentence and do not feel good about it at this time,” Arnold said.

Federal sentencing guidelines advised a sentence of 51 to 63 months and a fine of $10,000 to $100,000 for Davis’ charges. The guidelines are advisory and the judge is not bound to those.

If the $4.3 million isn’t paid in full before Davis’ release from prison, the court ordered him to pay the balance in installments of $1,000 a month with the first installment due 30 days after his release.

In the plea agreement, Davis admitted to using the fraudulent proceeds to hide business losses and for personal benefit. He admitted to gaining more than $1 million from the scheme, though prosecutors placed the actual loss to BB&T at somewhere between $2.5 and $7 million.

Davis also admitted to making an illegal transaction by taking $100,000 of the fraudulent funds from Davis Chrysler and putting the money into Davis Toyota.

Davis was originally indicted on 38 criminal charges, including 20 counts of wire fraud, 17 counts of money laundering and one count of bank fraud. He faced up to 40 years in prison had the case gone to trial.

The court recommended that he be housed in Federal Corrections Institute Morgantown or as close to Pittsburgh as possible and that the bureau of prisons evaluate him for alcohol abuse treatment.

The indictment alleged Davis built a multi-million dollar home and separate saloon in Lesage and bought two Lear jets while he was committing fraud.

Davis was the sole owner of Davis Chrysler from 1997 until he sold the business in 2003.