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Fraud Lawsuit Nets Velocity Press $1 Million

August 24, 2012
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SALT LAKE CITY—A federal judge here has awarded Velocity Press nearly $1 million, saying that KeyBank Utah defrauded the commercial printer by changing the terms of a loan without its knowledge, The Salt Lake Tribune reported. The bank is considering whether it will appeal the decision.

According to U.S. District Judge Ted Stewart, KeyBank officials rewrote the financial arrangement Velocity had made with Sanden Machine for the purchase of a $1.8 million customized press in 2006, the paper said. The judge ruled Velocity would not have signed off on the loan agreement had it known what KeyBank had done.

KeyBank was ordered to pay $900,000 for expenses Velocity incurred, attorney fees and roughly $138 a day between the time a bench trial was conducted in January through this past Monday.

According to the newspaper, Velocity had inked a contract with Sanden Machine to purchase the press and had arranged for financing with another bank when it was contacted by KeyBank, which offered a more attractive deal. However, KeyBank apparently green lighted the deal without requiring a letter of credit or a security agreement from the press manufacturer. At this point, Velocity had already made an $80,000 partial downpayment to Sanden.

Prior to the loan closing, KeyBank told Sanden it would have to secure a letter of credit before releasing a second payment to the manufacturer. Judge Stewart ruled that Velocity owner Drew Elkins was never informed of the requirement or other changes negotiated by Sanden and KeyBank.

Stewart ruled that the bank did not inform Elkins of the modifications and extra requirements to ensure the owner would sign off on the loan, the Tribune reported.

Since Sanden did not agree to secure a line of credit, KeyBank withheld further payments. Sanden went bankrupt in the interim and the press was never built.
 
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