A philanthropic businessman from Bryn Mawr admitted yesterday that he lied on bank documents to obtain more than $40 million in loans on his jet, Nantucket vacation home, and student-loan company.
Andrew N. Yao, 45, pleaded guilty to 10 fraud and money-laundering counts that carry a guideline sentence of about four to five years, prosecutors said.
Yao was the founder and sole shareholder of Student Finance Corp., a Delaware firm that specialized in trade-school loans and that filed for bankruptcy in 2002.
He was convicted of bankruptcy fraud last year in a federal trial in Delaware that revealed he had lied about $669,000 in payments to a mistress, former Playboy centerfold Alexandria "Lexie" Karlsen Wolfe, and $150,000 in gambling losses at two Las Vegas casinos.
Meanwhile, civil suits filed by his creditors and insurers, some pending, allege that the company engaged in a pyramid scheme that led to more than $400 million in losses.
"White-collar criminals like Mr. Yao do damage to our community through the use of fraudulent financial transactions that are often as pernicious and destabilizing as the damage done by drug dealers or those who possess illegal firearms," said U.S. Attorney Colm F. Connolly of Delaware, whose office prosecuted both criminal cases.
Yao's home phone number is unlisted and his lawyer, Mark Cedrone, did not return a call for comment from the Associated Press.
Yao and his wife, Lore, became well-known in Philadelphia social circles after donating money to or serving on the boards of various civic groups, including the Kimmel Center for the Performing Arts, the Free Library, and the Philadelphia Zoo. They donated at least $500,000 to the Kimmel Center, according to the center's annual report.
The loan-fraud indictment charged that Yao lied about his finances from 1998 to 2002 when he obtained a $25 million line of credit for his company, a $4.3 million personal loan for the jet, and a $3 million refinance loan on the Nantucket home.
Yao listed his 2000 income as $20 million on the loan applications but reported income and distributions totaling about $12.5 million to the IRS, prosecutors said. Also, he said he had $1 million in equity on his $1.7 million home, when he actually had no personal ownership in it, they said.
The Yaos cashed out $990,000 through the 2002 mortgage refinancing on the Nantucket home after settling the previous $2 million loan, the indictment said.
Victim banks included Wilmington Trust of Pennsylvania, First Union National Bank (now Wachovia) and U.S. Bancorp, authorities said.
Yao was sentenced in March to one year in prison on the bankruptcy fraud but remains free on appeal in that case.
He was released on bond yesterday in the loan-fraud case, with sentencing set for Sept. 5.