BALTIMORE — A former Hagerstown man pleaded guilty Wednesday in federal court to conspiracy to commit bank fraud in connection with a $1.75 million loan for a religious company that once operated in the city, according to the U.S. Attorney's Office.
Richard Wayne Hope, 53, of Denham, La., faces up to 30 years in prison, U.S. Attorney Rod J. Rosenstein said in a news release.
Hope has also agreed to pay $1.5 million in restitution to the bank involved in the case, the release said.
Hope's brother, Otis Ray Hope, also a defendant in the case, was sentenced to more than three years in prison in 2009.
Otis Ray Hope, who pleaded guilty to federal charges of tax evasion, subscribing to a false document and conspiracy to commit bank fraud, was also ordered to pay restitution of $2.4 million.
The Hopes were previously indicted together on charges of bank fraud and conspiracy to commit bank fraud.
The case against the Hopes involved the Shiloh Ministries, which operated the Shiloh Conference and Retreat Center, hosting church groups on weekends.
The facility, in the former YMCA building at 149 N. Potomac St. in Hagerstown, included a pool, rock-climbing walls and putting greens, The Herald-Mail reported.
On June 21, 2006 the building was significantly damaged by a fire, the release said. A fire marshal and a building inspector advised the Hopes that no one could occupy the building until numerous code violations were corrected and an occupancy certificate from the fire marshal was obtained, the release said.
According to former employees of Shiloh and other witnesses, Shiloh stopped conducting business, and no more conferences or retreats were ever held after that date, the release said.
Insurance proceeds were paid directly to a fire remediation company and to the Kabel Co., a construction company associated with the Hopes, the release said.
The insurance proceeds that went to the Kabel Co. were for repairs allegedly made to the building, the release said.
In September 2006, the Hopes applied to a bank for a commercial loan in the amount of $1.75 million to refinance a mortgage and to release approximately $175,000 being held in an escrow by the previous lender for renovations made to the building prior to the fire, the release said.
The brothers used a mortgage broker to assist with the refinancing. Richard Hope falsely represented to the broker that the Kabel Co. had repaired the damage caused by the fire, and that Shiloh was open for business and holding conferences and retreats again, the release said. In fact, Shiloh never reopened for business after the fire.
Based on the misinformation provided by the Hopes, the bank mailed Otis Hope an initial commitment letter to fund the loan and asked for Shiloh's past and current financial statements before making a final commitment, the release said.
Richard Hope submitted fraudulent financial statements to the bank overstating the company's assets and monthly cash flow and falsely reflecting five months of operations during which time the business was not open, the release said.
Richard Hope also submitted a fraudulent letter from a certified public accountant purporting that the accountant had compiled the financial statements, when Hope himself had created the statements, the release said.
Richard Hope also supplied the bank with a bogus corporate resolution giving him authority to borrow $1.75 million, the release said.
The resolution purported to be signed by an individual identified as "secretary," who was not a company officer and had not signed the document, the release said.
Relying on the misrepresentations, the bank loaned $1.75 million to Shiloh on Feb. 28, 2007. Neither the Hopes nor anyone else from Shiloh ever made a monthly loan payment to the bank, the release said.
The Hopes refused to respond to the bank's correspondence and phone calls, and the Shiloh building was abandoned and went into foreclosure, the release said.
A sentencing for Richard Hope has been scheduled for June 28 at 10 a.m., Rosenstein said.