David Vernier

MARQUETTE — The father of a woman convicted of conspiracy to commit bank fraud in relation to a $145 million circular check-kiting scheme was sentenced Monday for committing bankruptcy fraud, over a year after his daughter began her 18-month sentence in federal prison.

David Louis Vernier, 64, of Ishpeming was sentenced Monday by U.S. District Court Chief Judge Robert J. Jonker to 45 months in federal prison followed by three years of supervised release, according to a press release from the Department of Justice.

The charge stems from an FBI investigation that revealed Vernier was attempting to discharge over $3 million in debt he had accumulated while secretly retaining assets and business interests. Furthermore, the FBI found he lied in his original bankruptcy petition, as well as subsequent bankruptcy proceedings and in testimony in a related deposition.

Vernier pleaded guilty to the charge of committing bankruptcy fraud in August. However, Jonker concluded that Vernier, despite his guilty plea, had not accepted responsibility for his actions after a 40-minute long statement Vernier delivered during the sentencing hearing Monday.

“The bankruptcy process is intended to help honest but unfortunate debtors with creditors to resolve crushing debt and hopefully get a new financial start on life,” U.S. Attorney Andrew Byerly Birge said in a press release. “But Mr. Vernier tried to abuse the process and get his debts modified or set aside while hiding his true assets and business interests. That’s just another form of fraud. And the consequences for fraud in the federal system are serious, as he can now attest.”

At Vernier’s sentencing, Jonker said he “scrambled his finances and destroyed records as part of a conscious business plan to defraud his creditors” over a long period.

According to a previous Mining Journal article, Vernier filed a voluntary petition for Chapter 11 bankruptcy that included fraudulent statements and material omissions regarding income and property and reportedly devised “a scheme and artifice to defraud one or more of his creditors by concealing his income and his property,” court documents stated.

In 2012, Vernier’s request to have his millions of dollars in debt discharged was denied in U.S. Bankruptcy Court by Chief Judge Scott W. Dales because he did not retain the business records that would have allowed the court to thoroughly examine and analyze his financial status.

Vernier originally came to the FBI’s attention in 2012 while the agency was investigating the $145 million circular check-kiting scheme that involved his daughter, Brooke Vernier.

According to a previous Journal article, Brooke Vernier agreed to open Oasis Fuels Inc., Oasis Operating Inc. and Refresh & Refuel Inc. in 2010 to take over financially distressed businesses owned by her father, who had run numerous gas stations in the Upper Peninsula during the 2000s that fell into debt.

Financial problems had led Brooke Vernier and her father, who she previously identified in court as a co-conspirator, to decide to write checks, despite having insufficient funds.

Brooke Vernier wrote hundreds of checks transferring and attempting to transfer about $145 million among seven corporate bank accounts at three banks. This led the financial institutions to temporarily conclude, in error, that there was more money in Brooke Vernier’s corporate accounts than there actually was, causing the banks to suffer losses totaling more than $1.7 million.

The FBI’s investigation revealed David Vernier was running Brooke Vernier’s businesses and being paid by them, contrary to his claim that he had $3 million in debt, no real property, no income and no interests in any businesses when he filed for bankruptcy in October 2010.

However, the court determined the case involving Brooke Vernier and the case involving David Vernier were unrelated, according to a document filed in May. Both cases were investigated by the FBI and prosecuted by Assistant U.S. Attorney Maarten Vermaat.

Cecilia Brown can be reached at 906-228-2500, ext. 248.