Father and Son Convicted of Bilking Small Business Owners

PHILADELPHIA—Kenneth Mitan, 50, and Frank Mitan, 84, both of Farmington Hills, Michigan, were convicted today in a scheme that allowed them to fraudulently gain control of four small businesses and deplete the assets, announced United States Attorney Michael L. Levy.

The defendants preyed on small business owners who were interested in selling. Between 2005 and 2008, the defendants obtained a controlling interest in those businesses, failed to pay the agreed-on purchase price, then gutted the companies of existing assets. They diverted those assets into shell accounts so they could then further divert the funds for their own personal uses. The defendants would divert some of the target companies’ funds to other targeted companies. The purpose of these payments was to keep the other companies alive by providing them with just enough money to pay their most pressing bills, and thereby staving off bankruptcy for a few more weeks. Within a few months, the companies were bankrupt, leaving rent, vendors, creditors, utilities, and taxes unpaid.

Kenneth and Frank Mitan were each convicted of two counts of mail fraud and two counts of wire fraud. Kenneth Mitan was also convicted of one count of conspiracy, and one count of using a false name in furtherance of mail fraud. Co-defendants Charro Pankratz and Bruce Atherton previously pleaded guilty to their roles in the scheme.

Kenneth Mitan faces a maximum sentence of 105 years in prison and Frank Mitan faces a maximum sentence of 80 years in prison. Sentencing for the Mitans is scheduled for February 23, 2010.

The case was investigated by United States Postal Inspection Service and the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorneys Scott M. Cullen and Joe Khan.

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