MERRIMACK, New Hampshire (STPNS) -- MERRIMACK ? If you think Wall Street is on the verge of financial collapse, try Stephen Lussier.

Lussier, of 2 Wildwood Drive, Bedford, and former owner of a now-defunct Merrimack auto business, has been charged with bank fraud by federal prosecutors; owes thousands of dollars resulting from an out-of-state lawsuit; and, according to Merrimack police, was indicted last week on charges of theft.

All stem from Lussier?s alleged dealings through Classic Cars of New England, a dealership he owned at 714 Daniel Webster Highway.



In addition, court documents state, Lussier was also part owner and vice president of Karzman Credit Corp., which provided financing to customers. Through Karzman, Lussier helped customers obtain auto loans through Sovereign Bank.

Karzman and the bank agreed that proceeds from each loan would be deposited into an account in the Karzman name, court documents state. Lussier was then supposed to use money from the account to purchase automobiles that were the subject of the loans, thereby securing collateral for the bank.

According to court documents, from January to June 2007, Sovereign approved 23 auto loans totaling more than $430,000 to Karzman customers.

The problem, court documents state, is that Lussier didn?t purchase the automobiles but made false reports to the bank and his customers, instead using loan proceeds for personal benefit and to pay off accumulating business expenses.

Assistant U.S. Attorney Robert Kinsella charged Lussier with bank fraud on Monday, but could not comment much on the case.

Kinsella did say the maximum penalty for bank fraud is 30 years in prison, and Lussier is scheduled for an appearance in U.S. District Court in Concord on Sept. 30.

Lussier faced similar allegations in a civil lawsuit brought against him, his parents and his companies last year in federal court in the eastern district of New York.

New World Leasing LLC, of Lake Success, N.Y., filed suit against Lussier and his businesses, including Classic Cars of New England; his finance companies, Karzman Corp. and Karzman Credit Corp.; and his parents, George and Margaret Lussier, of Fort Myers, Fla., who were backing their son?s business.

Lussier didn?t contest the case, and a judge ruled against him by default last year, U.S. District Court records show. After a hearing in June to determine damages, the court issued a judgment against the Lussiers and their companies on Sept. 19 for $233,383.10 in damages, plus interest and expenses totaling more than $68,000.

The case bears some similarity to the allegations Lussier now faces in New Hampshire, said Jay Landau, director of the law firm that handled the suit, Hubschman & Roman PC, of Palisades Park, NJ.

?Our client had a similar problem,? Landau said.

New World Leasing had signed a credit agreement with Lussier?s financing company, Karzman Credit Corp., in 2005, the court found. New World is a company that provides financing ?on a full recourse basis? to various independent auto dealers who write loans to customers that are backed by New World?s credit, court records state.

The car buyer pays the dealer, but the dealer pays New World at a lower interest rate, making their profit on the spread. New World owned the loans secured by the vehicles as collateral.

From 2005 until spring 2007, Lussier sold about 150 cars under financing with New World, and all was well, the court found.

In April 2007, however, New World began trying to collect payments for some purported sales and learned that in some cases the customers had never received the vehicles, and in other cases, they were making payments to Karzman, but Lussier wasn?t making payments to New World. In both cases, money that New World had advanced to Lussier?s company had been diverted elsewhere, the court found.

?It went bad in the early spring of 2007,? Landau said. ?They liquidated the portfolio. They ended their business relationship with Karzman.?

At the time, New World had 97 loans for cars that had already been sold to customers who were making payments, and 12 loans for which it hadn?t been receiving payments. New World had the loans appraised and sold them as a package by auction for about $1.4 million, the court found.

Ultimately, the court found, the Lussier family and its companies owed New World $233,383.10 plus interest and expenses.

The federal court?s judgment holds Lussier and his parents equally responsible for the debt but collecting it is another matter. The judgment was ordered Sept. 19, and no further action has been taken as of yet.

Lussier is also the subject of an ongoing local investigation.

Last week, he was indicted on theft charges in Hillsborough County Superior Court, said Merrimack Deputy Police Chief Mark Doyle.

Since February, at least six people brought their automobiles to Lussier to be sold on consignment, Doyle said. Lussier allegedly sold the vehicles but never paid the original owners, keeping an estimated $150,000 to $200,000.

Doyle said police have submitted the information to the Hillsborough County Attorney?s office because it?s a complicated case with multiple alleged victims, vehicles and transactions. Also, Doyle said, the charges are felony-level offenses, which would be handled by the county agency.

A grand jury indicted Lussier two weeks ago, Doyle said, but Hillsborough County Superior Court officers said Wednesday, Sept. 24, they had no records of the case.

Doyle said county officials are putting together an arrest warrant for Lussier, which would be served by police as soon as it?s ready. Assistant County Attorney Catherine Devine, who is reportedly handling the case, could not be reached for comment Thursday, Sept. 25.

Earlier this year, Lussier lost a lawsuit brought against him in Hillsborough County Superior Court by a Colebrook man, who charged that Lussier had contracted to sell his 1934 Chevy ?Highboy? Street Rod, sold it then didn?t pay him for it.

Rossiter Holt Jr. won a $44,000 judgment against Lussier, and Lussier has been ordered to appear before a judge Nov. 4 for a hearing to set up a payment schedule, court records show.

Andrew Wolfe can be reached at 594-6410 or awolfe@nashuatelegraph.com. Karen Lovett can be reached at 594-6402 or klovett@nashuatelegraph.com.