North River Boats sinks

Discussion in 'Boating' started by riverbud55, Apr 13, 2009.

  1. riverbud55

    riverbud55 Well-Known Member

    AZ Topock-/CA Riverside
    Dale Miller
    Just was reading the jet boat forum, and was shocked that NR boats is filing for chapter 11 and is in some very serious trouble with The FBI:crazy:. Its very sad deal after getting my new North River last year and knowing there a top of the line boat. Guess it shows how bad things are now with this economy, The CEO and others are now in for some very serious trouble for trying to save the company. Also sucks is the employees got burned on there wages:sad2:.. Just kinda wonder were the bail out money is for the small company's:confused2: oh by the way NR wasn't that small

    this is a long read but very interesting on how thing go down but theirs kinda of a condensed version below

    North River Marine allegedly illegally inflated inventory reports and invoices to obtain millions in financing from Wells Fargo - with the bank's preliminary losses estimated at $3.3 million - and is accused of committing wire fraud, according to a Federal Bureau of Investigation special agent.

    In a search warrant affidavit obtained this morning by The News-Review, FBI Special Agent Kenneth Jameson said North River Marine included boats that had been sold and delivered - and therefore, no longer belonged to the company - in its inventory in order to obtain funding through its line of credit with the bank.

    "... I believe that North River Marine intentionally submitted inflated invoices and inventory in its weekly collateral reports in order to obtain additional financing from Wells Fargo," Jameson said in the probable cause affidavit.

    FBI agents issued the federal search warrant and seized reports, files and records and made digital copies of computer hard drives from the North River Boats, Inc., production factory in Green on Thursday.

    Employees at the Green production factory were back to work shortly after the search warrant was executed, an employee said this morning.

    North River Boats Inc. and North River Marine - the company's affiliated retail outlets - are separate entities but are referred to collectively as North River Marine in the affidavit.

    Wells Fargo Bank entered into a contract with North River Marine for an $8 million working capital line of credit in 2006. In October 2007, the credit line was increased to $10 million.

    As part of the agreement, North River Marine submitted weekly collateral reports to the bank. The amount of financing available to North River Marine varied, depending on its available inventory, according to the affidavit.

    Wells Fargo Bank learned of possible fraudulent invoices in the weekly collateral reports and requested cooperation from North River Boats, Inc., owner and President Brian Brush to address the issue. According to the affidavit, Brush refused to cooperate and "said that he did not want to make his customer base nervous."

    As a result, Wells Fargo closed North River Marine's working line of credit in February 2009, according to the affidavit. Shortly after, North River Marine closed its four retail stores in Wilbur, Clackamas, West Sacramento, Calif., and Marysville, Wash.

    At the time, Brush said the closures were the result of the struggling economy's impact on the recreation boat business, coupled with restrictions on recreational fishing seasons by the Oregon Fish and Wildlife Commission.

    Several calls to Brush this morning were not immediately returned.

    Phillip Bigler, former general manager for the four retail stores, told Jameson that Brush held tight control of North River Marine, according to the affidavit.

    "The accountants could not write a $5 check without Brush's permission, and (employees) were only able to calculate the inventory reports with Brush in the room with them," Bigler told Jameson.

    Bigler also told FBI agents that he believed Brush used the false inventory reports to obtain additional funding so he could float his business during a bad boat market, according to the affidavit.

    In addition to claiming boats that were already sold as inventory, North River Marine is also accused of counting about $50,000 worth of boat motors that were being sold on consignment for GE Capital Finance as collateral for its loan with Wells Fargo, according to the search warrant affidavit.

    Bigler told agents that North River Marine shifted around its inventory between its retail stores to ensure that the stated collateral matched the reported collateral when Wells Fargo was conducting a collateral exam at a particular store, according to the affidavit.

    According to the affidavit, Bigler joked with the FBI agent at one point about the possibility of collateral examiners for GE and Wells Fargo showing up at the factory to count the same engines on the same day.

    The investigation is continuing.
  2. metalman

    metalman Well-Known Member

    If they were based in DC maybe they would have got bail out $$ and bonuses...W