https://www.kwqc.com/2024/09/05/two-qc-men-sentenced-bank-fraud-money-laundering/

Two Illinois men are headed to federal prison after defrauding banks and laundering money through their construction company.

Erik Richard Jones, 46, and Mitchell Allen Melega, 38, were sentenced on July 23 to multi-year prison sentences following their convictions for conspiracy to commit bank fraud, bank fraud, and money laundering. Jones, of Colona, Illinois, was sentenced to 4½ years in federal prison to be followed by five years of supervised release.

Melega, formerly of Orion, Illinois, was sentenced to 6 years to be followed by five years of supervised release.

There is no parole in the federal system.

Both defendants were also ordered to pay $4.8 million in restitution.

At the sentencing hearing in front of U.S. District Judge James E. Shadid, the government presented evidence that between 2016 and 2017 Jones and Melega devised and executed a scheme to provide false documents to First Midwest Bank in Moline, Illinois, to induce the bank to provide loans to Colona-based I-80 Equipment for vehicle purchases and improvements.

Jones, the owner of I-80 Equipment, and Melega, the controller, then diverted loaned funds to other unauthorized uses and directed other employees of the business to provide false information in support of the conspiracy and scheme to defraud.

In addition, they diverted real estate loan proceeds advanced by Northwest Bank in Davenport, Iowa – which were intended to finance renovations to an apartment complex Jones purchased – to other uses, including paying off an unrelated loan for Jones’s family members and unrelated business expenses of I-80 Equipment.

Also at the sentencing hearing, the judge found the scheme – which involved both altering legitimate documents and completely fabricating false documents, included at least 110 vehicle purchases, and took place over an extended period of time – was particularly sophisticated.

Both men were charged in October 2020 in a 12-count indictment. The charges were conspiracy to commit bank fraud, (Count 1); bank fraud (counts 2 through 9); and money laundering (counts 10 through 12). Jones pleaded guilty in September 2023 to all counts of the indictment, and Melega pleaded guilty in March 2024 to the same charges.

The statutory penalty for conspiracy to commit bank fraud is up to 30 years per count; for bank fraud it is up to 30 years per count; and for money laundering it is up to 10 years of imprisonment per count.

“Our office is dedicated to prosecuting these serious financial crimes,” said U.S. Attorney Gregory Harris. “Actions like the defendants’ cause significant harm to banks and undermine the stability of our financial system. We are grateful to our federal and local law enforcement partners for their commitment to these investigations and cases.”

The Internal Revenue Service, Criminal Investigation Division; the Federal Deposit Insurance Corporation, Office of Inspector General; the Federal Bureau of Investigation, Springfield Field Office; and the Illinois Secretary of State Police investigated the case. Assistant U.S. Attorneys John Mehochko and Jennifer Mathew represented the government in the prosecution.