The manager of a defunct Rapid City auto dealership was sentenced Monday to nearly 10 years in federal prison for bank fraud and tax evasion. He was ordered to make repayments totaling $1.5 million.
Brent Bednarz, 44, earlier pleaded guilty to both charges, among almost five dozen criminal charges that the U.S. Attorney’s Office brought against him in 2015.
“He could have been sitting on more money than he could ever count,” Supervisory Assistant U.S. Attorney Gregg Peterman told the court. “Instead, he steals it.”
Bednarz’s uncle, Peter Haman, established Rapid Motors auto dealership in 2008 and installed Bednarz as general manager. Bednarz had five felony convictions at that point, but Haman recognized his nephew’s talent at selling vehicles and thought “he deserved a second chance.”
Haman, a businessman from Douglas, Wyo., invested around $2 million in the dealership until it closed in 2013, according to court documents.
Rapid Motors apparently did well — and investigators said Bednarz’s salary went from $8,000 to $10,000 a month — yet he embezzled from the dealership over several years.
During a daylong hearing Monday at the Rapid City federal courthouse, prosecutors repeatedly talked about a “kickback scheme” Bednarz ran with Chris Brunner, owner of local car dealership Cars R Us. Prosecutors said Brunner got paid excessive fees to buy vehicles for Bednarz at auction, Bednarz would pay Brunner inflated prices for the vehicle supply, then Brunner would pay back Bednarz the difference between the vehicles’ inflated price and their actual cost.
Bednarz also admitted passing off personal purchases as business expenses or assets, including in a report to satisfy a bank loan. Prosecutors said his personal purchases included a 2-carat diamond ring for his girlfriend, worth $23,800, housing rental of $4,600, as well as 12 custom-made suits, studio photos with his children, a hot rod car, vacations and cocaine.
“I do believe he will not change — ever,” Peterman said, bringing up Bednarz’s previous convictions of theft, burglary and perjury. “This is a man who’s proven time and again that he cannot be free.”
Defense attorney Tom Diggins said Bednarz didn’t come up with the idea of opening Rapid Motors so he could steal from his uncle; after his convictions, he wanted a chance to redeem himself before his family. Diggins added that Bednarz’s fraudulent business activities were primarily devised to evade taxes, not to cheat Haman.
At the same time, Bednarz hadn’t been paying income taxes.
Bednarz admitted evading taxes on his compensation as Rapid Motors’ manager. From 2010 to 2013, he failed to pay the IRS $490,000.
By the time Haman discovered his nephew’s fraudulent activities, he had lost more than $1 million in Rapid Motors.
“I respect my uncle, I look up to him and I want to be more like him, not hurt him,” Bednarz said between tears. “I’m really sorry for what happened.”
But Haman said professing remorse isn’t enough. He asked U.S. District Court Chief Judge Jeffrey Viken for the longest prison sentence the judge thought was appropriate in the case. Among the people seated in the gallery, listening to him, was his sister and Bednarz’s mother.
At the end of a hearing that took up nearly seven hours, Viken sentenced Bednarz to nine and a half years in prison for bank fraud and five years for tax evasion — to be served at the same time. After prison, Bednarz will undergo five years of supervised release.
His 56 other criminal charges were dismissed under his plea agreement with the U.S. Attorney’s Office.
The court ordered Bednarz to begin paying back his uncle and the IRS once he gets out of prison.
Haman doesn’t put much hope in recovering his $1,050,238.64. “Restitution,” he told the court, “not gonna happen.” He has an ongoing civil case against Bednarz and Brunner in Pennington County, which is scheduled for trial in January.