Former Texas Car Dealer Faces Prison for Lying to Obtain Loans

A former Henrietta car dealer may face prison time for lying to obtain $106,050 of loans from a Wichita Falls bank, according to allegations in court records.

Kenneth Windell Patterson, 78, of Archer City was free Monday from Wichita County Jail on a bond of $10,001, according to online jail records.

Patterson, who owned Ken Patterson Auto Sales Inc., pleaded guilty in 30th District Court on March 4, 2011, to false statement to obtain property or credit, according to court filings.

A judge ordered him to pay restitution to the bank and serve 10 years of deferred-adjudication probation, which means he could avoid a conviction by successfully completing probation, according to court records.

But Patterson was arrested Friday and is accused of falling behind $41,713 in restitution to a bank, failing to report to his probation officer and not taking a theft class within the required time, according to allegations in court documents.

The Wichita County District Attorney’s Office is asking a judge to go through with convicting Patterson in light of the alleged probation violations, court documents show. 

Patterson faces up to 20 years in prison in connection with a June 19, 2008, incident. 

An affidavit for arrest warrant gave this account of the allegations against Patterson: 

A Wichita Falls police officer went to then-First National Bank of Byers-Cattleman’s branch and spoke with the president Dec. 8, 2008.

The president said the bank had provided loans based on the vehicles on the lot at Ken Patterson Auto Sales for several years. 

About two months ago, the bank found out Patterson was getting loans for vehicles he didn’t own and wasn’t acquiring.

Based on a certificate of title and other paperwork, the bank would mail a loan to the car dealership.

Patterson was supposed to provide the vehicle title to the bank within two days. This went on from the mid-1990s until 2008 when problems cropped up.

For example, on Oct. 6, 2008, Patterson faxed the bank a form on a vehicle’s wholesale value and a copy of the title. 

Patterson wanted a $6,550 loan for a 2004 Ford, which was to be collateral for the loan.

The bank made the loan and deposited the money in Patterson’s business checking account. 

The bank prepared a promissory note and commercial security agreement for the loan.

The bank routinely used a stamp for Patterson’s signature on his loans as a courtesy to save him from driving from Henrietta to Wichita Falls for each loan.

Patterson had given the bank the signature stamp and authorized its use for his company’s loans. 

In October 2008, bank staff found out the financial institution had made 11 loans to Patterson on vehicles he didn’t own or acquire using the method above.

The bank president told the police officer that Patterson didn’t have the money to make good on the fraudulent loans. 

The bank found out about the scheme when Patterson told his loan officer he was using vehicles he didn’t own as collateral. 

He revealed the fraud when he knew bank staff members were coming to do a floor plan inspection, and he would have to answer for the missing vehicles. 

The bank president said Patterson admitted what he had done when he confronted him.

Patterson said for the last three months, he had used vehicles he didn’t own as collateral. 

Source: Former Henrietta auto dealer arrested for alleged probation violations