Joe Prebul
Federal authorities have arrested Chattanooga auto dealer Joe Prebul on 11 counts of wire fraud.
The complaint says Prebul and his wife used over $6 million provided by a New York relative on a lavish lifestyle, while his auto group was suffering heavy losses.
It says the relative believed his money was being invested, but it actually was being spent freely by the Prebuls.
Prebul, dressed in a business suit but handcuffed and in leg irons, appeared before Federal Magistrate Bill Carter on Tuesday afternoon with attorneys Wayne Peters and Charles Gearhiser.
He was allowed a $2 million bond. In Federal Court, no actual bond is posted, but the defendant must forfeit the amount if he absconds.
A preliminary hearing will be held later in New York City. Attorneys said Prebul has funds in bank accounts that will allow him to hire lawyers in New York City as well as pay experts. Prosecutors said his Merrill Lynch account has been frozen.
He agreed to not use his powered glider or Citation twin-engine jet and to give up his passport.
Prosecutor Gary Humble said the charge carries up to 20 years in prison, and there is a possible fine up to $250,000 on each count.
Scott Romonowski, a criminal investigator with the U.S. Attorney's Office for the Southern District of New York, said Prebul made "false representations regarding the investment of money" and caused millions of dollars to be wired to him from New York from October 2005 to July 2008.
There are 11 wire transfers of large sums of money, including one for $5 million on Dec. 17, 2007, and one for $3 million on May 30, 2007.
The complaint says Prebul currently owes the relative $7,641,000.
The 48-year-old Prebul, president of Prebul Auto Group, has had approximately 11 dealerships in Tennessee and Georgia, including Prebul Jeep, Inc.
The complaint says the relative, who "gave millions of dollars to Prebul for investment purposes," is in the music industry.
It says Prebul Jeep had two accounts with Chrysler, including a financing account and a cash management program account.
The complaint says the latter Chrysler account where Prebul put the money did not earn interest, but Prebul told the relative he was making as much as six percent.
It says Prebul told the relative he could not invest the money with Chrysler himself, but had to go through him.
The complaint says Prebul sent some documents saying the money was earning interest and returned some funds when requested by the relative.
It says Prebul used the funds "to support his business and lavish lifestyle."
He used the money for Prebul's real estate properties and airplanes and drew an annual salary of about $1 million, it was stated.
It says Prebul used the relative's money for "personal expenses, including private chartered planes, family vacations, golf lessons and tournaments and five-star hotel accommodations."
It was also used to pay the personal credit cards of Prebul and his wife. From about December 2006 to December 2008, the credit card expenditures totaled approximately $800,000, with an average monthly balance of around $15,000.
The complaint says from about 2005 to about 2008, the Prebul Auto Group lost at least $1.6 million.
The investigator said the relative began demanding the return of his money, which had grown to $6.8 million with some $800,000 interest owed.
He said last Aug. 4 that Prebul admitted by phone to the relative that he had used his money for expenses related to the dealership. He then met with the victim in New York and admitted owing him millions of dollars, it was stated.
Prebul has served on various automotive boards that include advertising, marketing, and dealer council associations for various automotive manufacturers. He has also served as chairman of the Chattanooga Auto Trade Association, director of the Tennessee Automotive Association, and is currently a member of the Tennessee Motor Vehicle Commission.
He served a term as a board member of the Chattanooga Metropolitan Airport
Authority.
A 1978 graduate of East Ridge High School, who attended the University of
Tennessee at Knoxville, he is a member of the Chattanooga Rotary Club.
He is an organizer and director of CapitalMark Bank. Craig Holley, president and CEO of CapitalMark, said, "Today we learned that one of our directors, Joe Prebul, has been charged in the United States District Court in the Southern District of New York on federal wire fraud charges. We are not in a position to comment on Mr. Prebul's situation other than to say that the allegations set out in the charges do not involve CapitalMark Bank & Trust. We are obviously concerned for him and his family.
"CapitalMark Bank & Trust is financially sound, and the allegations against Mr. Prebul do not materially affect the bank in any way."
Prebul has been a contributor to a number of Republican candidates.