Executives of Brooke Corp. indicted on fraud charges
Nov 15, 2012 (Menafn - The Salina Journal - McClatchy-Tribune Information Services via COMTEX) --Two men who were executives of Brooke Corporation, a now defunct insurance franchising business based in Phillipsburg and Overland Park, have been indicted on federal financial fraud charges, according to a news release from the U.S. Attorney's Office.
Robert D. Orr, 59, of Denver, and Leland G. Orr, 50, of Phillipsburg, are charged with one count of conspiracy to defraud the Securities and Exchange Commission and three counts of making false statements in filings to the SEC. In addition, Robert Orr is charged with two more counts of making false statements in SEC filings and one count of bankruptcy fraud.
The Orrs were executives of Brooke Corp., a holding company that was engaged in insurance franchising, insurance agency financing and banking. Brook Corp. owned a majority interest in Brooke Capital, Aleritas and Brooke's Savings Bank. Brooke Capital sold insurance agency franchises and provided bookkeeping and other support services for franchises. Aleritas sold the majority of loans it made to franchisees and typically remained responsible for loan servicing. The companies were known collectively as the Brooke Corp.
The indictment alleges that in 2007 and 2008, the Brooke Corp. became increasingly short of cash and its financial health became dire. In attempting to conceal financial problems, Brooke Corp.'s management allegedly misrepresented the number of viable franchises, the health of Aleritas' loan portfolio and other financial information to the SEC, investors and lenders. The Orrs are accused of conspiring to present a false aggregate picture of the Brooke Corp.'s financial condition in order to obtain money, dividend payments and cash transfers for themselves.
If convicted, they face up to 20 years in federal prison and a fine up to 5 million on each count of making a false statement in SEC filings; and up to five years and a fine up to 250,000 on each of the other counts.
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