VIP Finance VIP Finance's "Auto Clup" is a rip-off! Dallas, Texas

If the Lakes have no problem ripping off the IRS, they definitely won't think twice about ripping off us as consumers.


September 27, 2010 Colleyville, Texas
Original Complaint Includes Violation of Banking Secrecy Act
LNO Exclusive
by Nelson Thibodeaux

The forfeiture action against Kathy Lakes, of Colleyville included  "$5,965,057.00 in U.S. currency found at the residence at
4400 Eaton Circle, Colleyville, Tarrant County, Texas"

Additional Federal Records obtained by LNO indicated the funds were actually seized first on November 18, 2009.  Papers reveal that Kathy Lake is represented by attorney, Paul E. Coggins, a name that may sound familiar to many since he is former US Attorney for the Northern District.

The lawsuit federal forfeiture papers filed Thursday against Kathy Lake reads:

$6,772,475.42 in funds contained in account XXXX0765 in the name of Kathy Lake at First Southwest Company, Brookstone Securities, Inc., Dallas, Texas; $247,082.81 in funds contained in account XXXXXX8234 in the name of Procon of Texas at Capital One Bank, Dallas, Texas; $784,114.00 contained in account XXXXXX8439 in the name of Air IQ at Capital One Bank, Dallas, Texas; $5,965,057.00 in U.S. currency found at the residence at  4400 Eaton Circle, Colleyville, Tarrant County, Texas; Real property located at 4400 Eaton Circle, Colleyville, Tarrant County, Texas, including all buildings, appurtenances, and improvements located thereon 9/23/2010 3-10-cv-1916-L

TAD shows the 4400 Eaton Circle address valued at $900,000 and commercial property at 4125 Colleyville Blvd. valued at $262,900 both belonging to Kathy Lake.
The "Legal Authority for Forfeiture" in the original complaint claimed violation of the United States Bank Secrecy Act (BSA), because the property "was involved in or traceable to property involved in the violations."
In part the act requires any financial institution that engages with a customer in a currency transaction (i.e. a deposit or withdrawal) in excess of $10,000 must report the transaction to the IRS on a form known as a "CTR".  The document explains that CTRs are "often used by law enforcement agencies to uncover a wide variety of illegal activities, including narcotics trafficking and money laundering.  Many individuals involved in these illegal activities are aware of such reporting requirements and take active steps to cause financial institutions to fail to file CTRs.  These steps are often referred to as "structuring" and involve making multiple cash deposits in amounts of $10,000 or less to multiple banks and/or branches of the same bank on the same day, on consecutive days, or within a few days of each other."

The document states this is a criminal activity and provides for the forfeiture of any property involved in the violation(s).
The Government claims facts supporting forfeiture include a 2009 investigation initiated on Larry Lake and his wife Kathy Lake's  financial activities. The claim is the couple "devised a scheme" to conceal their net worth "before and during the bankruptcy proceedings concerning Larry Lake.  The document claims among methods of concealment are movement of money from Larry Lake's personal accounts to Kathy Lake's personal financial and business financial accounts.  Allegedly the Lakes concealed proceeds from the bankruptcy court and the IRS by structuring over $9 million in cash into financial accounts from August 2006 through November 2009, ultimately resulting in nearly $12 million accumulating in an investment account and $800,000 accumulating in each of two business financial accounts.  The Lakes purchased the Woodland Hills home at 4400 Eaton Circle for $883,715.33 in 2006 using  "a substantial portion of the structured cash in the purchase."  The Lakes also accumulated $5,965,057 in currency which was stored at this address.  "During the time they accumulated this wealth, Larry Lake and Kathy Lake jointly reported significantly less in adjusted gross income to the IRS."
Lake graduated from the University of Texas in Austin in 1969 and has been a licensed pharmacist since June 4, 1969.  He was previously married to Jacqueline Ruth Lake and the couple had 3 children.  The couple divorced in 1982 and Lake married Kathy Lyn Loyd in 1984 having one child.  The couple divorced in 1990 and as part of the divorce decree, Kathy Lake was awarded a Grapevine Drug store business.  The document states, "according to Larry Lake, Larry and Kathy have since remarried."
Also named is VIP Finance where loans are made to customers based on the value of their vehicle as the customer's credit.  The company has 5 locations. Another business CASH Auto Sales is a business selling used cars.

McLennan County records indicate Kathy Lake obtained an assumed name certificate for AIR I.Q. located in Waco.  The Waco address for Air I.Q. is a condominium titled to Larry and Kathy Lake's daughter.  The complaint states there are no corporate filings with the Secretary of State for Air I.Q. and "the bank accounts for Air IQ do not appear to be normal business accounts; there are not day-to-day expenses and the accounts appear to be used solely for the receipt of cash deposits and subsequent funds transfers into other Lake-controlled accounts."

The complaint came to the same conclusion on another McClennan assumed name certificate for Intertrak Services.

The Grapevine Drug store filed Texas Sales and Use Tax Returns from 2006-2008 listing Larry Lake as the taxpayer and checks signed by Kathy Lake.

The document includes references to "Larry Lake's Criminal History", including a incident in 1989 at the Burrus Supermarket when Lake was the pharmacist.  "..the complainant was preparing to pay for groceries when the pharmacist walked up to the checkout counter, picked up her $50 bill and placed a receipt on the counter then walked back to the pharmacy, the complainant followed Lake, inquiring what he was doing taking her money.  According to police reports, Lake replied the money was to pay a bill owed by the complaint's sister; the complainant demanded her money back and Lake refused so he was charged with theft.  As previously reported on LNO, Lake paid a fine and was placed on 1 year probation.

LNO also previously reported that Lake was convicted in November 2005 for an arrest on August 14, 2005 for the Unlawful Carrying of a Weapon. Lake pled guilty and received 10 years probation. The document elaborated on the arrest, according to police reports, an officer was flagged down by a citizen and received information that a subject matching Larry Lake's description had pointed a "MAC 10" submachine gun at him and told him to get off the property at the Division St. Arlington property which is a VIP Finance location.  Officers located the vehicle and stopped it determining Lake was the driver and in the process saw a 9 mm Tec-9 machine pistol with a loaded magazine on the front seat.  The weapon had a "stove pipe", meaning a round was sticking up in the ejection port as if the weapon had been attempted to be fired but had jammed.
The report went on to list financial accounts, "which are directly related to or involved in the bankruptcy fraud and/or structuring offense," that including descriptions on 20 separate accounts including bank and security accounts.
In the account analysis portion of the complaint, among the numerous descriptions, it was noted that on December 13, 2006, Kathy Lake used funds from one of the accounts to obtain a cashier's check in the amount of $883,715.53 that was used to buy the residence at 4400 Eaton Circle in Colleyville.

The review also described photos from Capital One Bank branch in Colleyville on July 28 and 29th.  On the 28th Larry Lake was seen making a deposit for $9,460 and 35 minutes later shows Kathy Lake inside the same lobby at the same Teller making a deposit of $9,813.  The next day Larry Lake made another cash deposit for $4,340.

On November 17, 2004, Larry Lake filed a Chapter 13 Voluntary Petition in the US Bankruptcy Court in Fort Worth.  Kathy Lake was not listed as a co-debtor but as Lake's current wife.  During the course of the investigation the Government alleges that Larry Lake transferred funds through numerous transaction to his wife, including large sums of cash and security accounts.  Lake also failed to declare his interest in various operations noted herein including the Grapevine Drug outlet.

The Government document also claims that the Lakes "did not file federal income tax returns from 1993 thru 1998 until December 1999 and December 2000".  The Government also reported their investigation found that the VIP Finance company from 2004 through 2008 reported $35.8 million in gross receipts but the actual gross receipts was more than $53 million.

In 2003, the Lakes informed their CPA they had sold their interest in the Grapevine Drug outlet and no longer reported business or income from that business on tax returns from 2004 to 2008.  However, the document reports on checks specifically written to the Lakes or to third parties on their behalf, such as the IRS for their personal income taxes.  The result was income from 2004 to 2008 was omitted in the amount $1.3 million.  A summary in the document is shown below.




During the November 18, 2009 search and seizure warrant executed at the 4400 Eaton Circle address, items recovered included daily cash register logs and monthly bank statements from Grapevine Drug Mart from 2007, 2008, and 2009 and deposit slips from VIP Finance. During the search, "a very large amount of currency was discovered in numerous locations, including two safes and two bags totaling $5,965,057.00.  Listed were a.) small duffel bag - $275,700, b.) large duffel bag - $1,072,257, c.) small safe - $166,050, d.) Large Safe - $4,364,182 and e.) 17 separate sealed bags - $86,868.

The Mercedes at the home is registered to Cash Auto Sales, Inc. at the 4125 Colleyville Blvd. address.  Texas State Records show the corporation's Register Agent is Larry Lake, the husband of Kathy Lake.
The investigative report Conclusion states:
"Based on the investigation and the information set out above, Larry Lake concealed his net worth before and during his bankruptcy proceedings and made several false declarations or statements in connections with the proceeding.  These statements were made in an effort to conceal property belonging to him (the debtor in the bankruptcy) from the trustee and his creditors.  Further, based on the investigation and the information set out above, the Lakes concealed cash proceeds from the bankruptcy court and the IRS by structuring over $9,200,000 in cash into financial accounts from August 2006 through October 2009.  Over 880 separate deposits under $10,000 were made into 12 different accounts at 4 different financial institutions controlled by the Lakes during that 3 - year period.  In addition to the $9,200,000 structured into the financial system, the Lakes accumulated and concealed $5,965,057 in U.S. currency inside their house.  During the time they accumulated this wealth, the Lakes jointly reported significantly less in income to the IRS; from 2004 to 2008 the Lakes did not report $1,325,000 in income received from Grapevine Drug Mart Mart and $17,000,000 in income received from VIP Finance."

LNO is unaware of a court date set for the forfeiture hearing, nor is LNO aware of any criminal proceedings or indictments handed down or expected as of the posting of this article.

Please go to the Supreme Court of Texas Unathorized Practice of Law website and file a complaint.

http://www.txuplc.org/