Opinion ID: 762144
Heading Depth: 3
Heading Rank: 1

Heading: 1985-86: LiVorio-Sabatini Group commences bust-out scheme

Text: 9 In 1985, the LiVorio-Sabatini Group obtained from Bank One of Youngstown (Ohio) (Bank One) commercial financing for the purchase and development of the Campgrounds. Bank One and the LiVorio-Sabatini Group devised an installment financing plan to sell undivided interests in the Campgrounds. Following a tour of the Campgrounds, interested purchasers executed sales agreements (the Agreements For Deed) and installment financing contracts. The resulting loan proceeds were then disbursed among the Group's account and Bank One's reserve accounts. Huge profits followed. 10 In order to execute the bust-out scheme, the Group first needed an influx of financing and an appearance of credit-worthiness. The Group obtained both by bribing two Bank One officials. After these officials touted the Campgrounds to their superiors, the Group received substantial commercial loans and an on-site installment loan facility through Bank One. The ensuing sales of interests in the Campgrounds helped further create the appearance of credit-worthiness and provided a quick infusion of cash into the business. The LiVorio-Sabatini Group was then able to proceed with its bust-out scheme. Once the Group obtained Plaintiffs' money up-front as a result of financing obtained by Plaintiffs, it diverted the money from the Campgrounds. In 1985 and 1986, the Campgrounds generated more than $12 million in sales through the use of Bank One's on-site installment loan program. The Campgrounds were under construction at this time. 11 However, in 1986, senior Bank One officials uncovered the fraud, finding that the LiVorio-Sabatini Group was draining the company. In July 1986, Bank One canceled its loan relationship with the Group, thus imperiling the continuation of the bust-out scheme. 12