A federal jury has convicted a North Bay businessman of bank fraud and other crimes he committed even at the same time that he was running as a candidate in 2003’s gubernatorial recall election.
Ned Roscoe, 51, of Fairfield, a former owner and officer of Cigarettes Cheaper!, was convicted yesterday of one count of conspiracy to commit bank fraud and to make false statements to Comerica Bank, 13 counts of bank fraud, and 14 counts of false statements to a bank, federal prosecutors said.
Roscoe is scheduled to be sentenced by U.S. District Judge Ronald White on June 6 in San Jose; the crimes of which he was convicted carry penalties that could add up to decades in federal prison and millions in fines, plus restitution.
Cigarettes Cheaper!, based in Benicia, at its peak had almost 800 retail stores nationwide and $1 billion in annual revenue. After a month-long trial, jurors concluded that Roscoe from August through November 2003 directed company accountants to inflate the company’s weekly borrowing base reports of inventory submitted to Comerica Bank, eventually inflating the value of the company’s inventory by more than $16 million. He did so to get more money from Comerica through Cigarettes Cheaper!’s $21 million line of credit and to avoid a pay-down on another, $10.7 million credit line.
The jury also agreed that evidence showed that Ned Roscoe and his father, John Roscoe, 81, of Green Valley, conspired to defraud Comerica Bank and make false statements to the bank. And Ned Roscoe directed a company accountant to falsely inform Comerica Bank in late November 2003 that the cause of the $16 million in inflated inventory was due to clerical or accounting errors.
Ned and John Roscoe first were indicted by a federal grand jury in June 2007, and a second, superseding indictment containing the counts that actually went to trial was handed up last September. John Roscoe pleaded guilty to a conspiracy count in January; his sentencing has not yet been scheduled.
Ned Roscoe ran as a Libertarian in the October 2003 race to oust and replace Gov. Gray Davis. In a blog he maintained at the time, he said he was counting on the support of “this political base, formed first of smokers with many different political persuasions, united in the belief that we must respect the freedoms of others in order to have freedoms of our own, combined with others seeking sensible, realistic actions by a new Governor.”
“I am optimistic, with the calm confidence of a Christian with four aces,” he wrote. “Government isn’t like business. Good government needs consensus. I can work with Legislators and officials to decide rapidly and to do what makes sense quickly. My sense of urgency comes from having customers to serve and bills to pay. My top priority is to improve the prosperity of workers without expanding the burden of government. That is, to do the decent thing.”
He finished 34th in a field of 135, earning 2,250 votes (about .02 percent of all those cast).