A federal Grand Jury in New York City has indicted Chattanooga auto dealer Joe Prebul on 11 counts of wire fraud and one count of mail fraud.
Prebul is expected to be arraigned on the indictment before United States District Judge William H. Pauley III on May 15 at 2 p.m. in Manhattan Federal Court.
Each of the counts carries a maximum sentence of 20 years in prison and a maximum fine of the greater of $250,000, or twice the gross gain or loss from the offense.
A criminal complaint had been filed against him Feb. 10 in New York after his brother-in-law, Danny Bensusan, went to authorities saying he had been bilked out of millions of dollars.
The indictment does not list Bensusan - a prominent New York City music club owner - by name, but refers to him as Victim 1.
Prebul has been free on bond since the surprising charges were filed and he was arrested by local FBI agents.
His Prebul Auto Group filed for bankruptcy, and it has been split up and sold.
Lev L. Dassin, the Acting United States Attorney for the Southern District of New York in a press release announced that Prebul, 48, of Signal Mountain had been indicted.
He said, "Prebul owned and operated a number of car dealerships in Georgia and Tennessee. Commencing in approximately 2004, Prebul represented to a New York City investor, a relative of his, that an investment in a cash management program account held by Prebul's car dealerships would earn above-average interest rates, and that invested money would be liquid and accessible. As a result, the investor sent Prebul millions of dollars over time to be invested.
"In return, Prebul occasionally caused statements or spreadsheets to be sent to the investor which falsely showed the investment earning money at a specified rate. In June 2008, the fictitious account statement sent to the investor showed principal and interest in the amount of at least $12 million. However, on multiple occasions in July and August 2008 when the investor demanded his money back, Prebul refused.
"During that same period, contrary to the fictitious June 2008 account statement, the account contained far less, and by July 31, 2008, only approximately $700,000 was left in the account. Most of the investor's funds had instead been spent to finance Prebul's businesses and personal and family expenses, including private chartered planes, vacations, and five-star hotel accommodations."
U.S. Attorney Dassin praised the work of the criminal investigators of the United States Attorney's Office. Assistant United States Attorneys Reed M. Brodsky and Jennifer E. Burns are in charge of the prosecution.
United States Of America v. Joseph Prebul Indictment