HICKORY, NC (WBTV) - The founders of a Hickory-based business were indicted Friday on charges of conspiracy relating to fraud which totals nearly $25 million.
The Department of Justice (DOJ) said the founders of Zloop, Robert M. Boston, 53, and Robert S. LaBarge, 50, both of Hickory, allegedly defrauded franchisees, investors and lenders. According to the indictment, Boston and LaBarge are accused of obtaining millions of dollars which were spent on personal real estate, a private plane and the racing career of Boston's son.
According to court documents, Boston and LaBarge founded the electronic waste recycling firm in 2012.
The Department of Justice says that federal law requires potential franchisors to disclose certain litigation and bankruptcy matters in a franchise disclosure document. The indictment claims that Zloop's franchise disclosure documents omitted required information, including that Boston's former company had filed for bankruptcy and that Boston had filed for personal bankruptcy in the past.
Boston is accused of being held liable knowing that he submitted false financial documentation to obtain $2.9 million in credit, according to court documents.
Boston and LaBarge reportedly caused Zloop to raise money through the sale of equity around December 2012, the indictment alleges. According to the court documents, Boston and LaBarge caused a misleading private placement memo to be sent to investors who ultimately invested approximately $2.5 million in the company.
Court papers claim the memo contained half truths and omissions of Boston's bankruptcy history and that the founders caused the company, Zloop, to spend more than $1.5 million on personal real estate.
Boston and LaBarge are accused of allegedly spending hundreds of thousands of dollars on a private plane, a new Corvette and a new Grand Cherokee, according to the indictment. The document claims that more than $500,000 was spent on racing-related expenditures and approximately $79,808 on a suite at a professional football stadium.
The DOJ said Boston and LaBarge were each charged with one count of conspiracy to commit wire and bank fraud, one count of wire fraud, one count of securities fraud, one count of bank fraud and one count of money laundering conspiracy. According to the DOJ, LaBarge was also charged with false writing in connection with an FBI investigation.
The conspiracy and bank fraud charges each carry a maximum prison term of 30 years, the DOJ stated. The wire fraud and securities fraud charges both carry a maximum prison term of 20 years. The maximum penalty for money laundering conspiracy is 10 years in prison. LaBarge could face five years in prison for false writing.
Boston and LaBarge appeared in the United States District Count of Charlotte Friday, the Department of Justice said.