A press release from the U.S. Attorney’s Office:
Chicago Investment Advisor Sentenced to Three Years in Prison for Defrauding a Suburban Bank and Two Clients out of More Than $3.2 Million
CHICAGO — A Chicago investment advisor was sentenced today to three years in federal prison for engaging in a scheme to defraud an Oak Brook bank and two of his clients out of more than $3.2 million.
ROBERT J. LUNN made a series of misrepresentations to Leaders Bank to obtain a line of credit and loans purportedly for the benefit of his business, Lunn Partners LLC, and two of his clients, including former Chicago Bulls player Scottie Pippen.
Lunn misled the bank about the value of his assets and the purpose of the financing, and he fraudulently stated that Pippen and the other client, retired venture capitalist Robert Geras, were aware of the loans.
In reality, neither Pippen nor Geras had any knowledge of them.
Lunn used nearly all of the fraudulently obtained funds for his own benefit and to pay some of his other clients.
A federal jury in 2014 convicted Lunn, 66, of Chicago, on five counts of bank fraud.
In addition to the 36-month sentence, U.S. District Judge Charles R. Norgle also ordered Lunn to pay restitution of more than $1.16 million to Leaders Bank, and $400,000 to Pippen.
“It is clear from the evidence that Lunn’s avarice knows no bounds,” Assistant U.S. Attorney Kenneth E. Yeadon and Special Assistant U.S. Attorney Richard G. Stoltz argued in the government’s sentencing memorandum.
“He enriched himself by taking out the fraudulent loans and went to great lengths to conceal his crime from Leaders Bank, Mr. Pippen and Mr. Geras.”
According to evidence at trial, Lunn initially obtained a corporate line of credit from Leaders Bank for $480,000 in May 2001. He increased the credit line twice in 2004, first to $1.2 million and later to $1.32 million, after submitting financial statements that falsely proclaimed personal ownership of millions of dollars in stocks.
In September 2002, Lunn arranged for an unsecured bank loan of $1.4 million, purportedly for the benefit of Pippen. Lunn secured the loan by falsely representing that the proceeds would be used by Pippen to purchase an interest in an airplane.
The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Chicago Regional Office of the U.S. Securities and Exchange Commission provided cooperation and participation in the prosecution.
The government is represented by Mr. Yeadon of the U.S. Attorney’s Office for the Northern District of Illinois, and Mr. Stoltz, a senior attorney with the SEC.