North River Boats Out of Trust

[ABoater]

The North River retail location near us shut its doors unexpectedly some time ago. They told their customers, "not to worry", that it was just temporary...

Being "out of trust" is a serious situation. Banks/lenders don't take it lightly. The owner of a very successful dealership around here spent time in prison for being out of trust and foxing deals with the bank. The dealership has since closed, but you are all aware of the brand (nationwide builder).



North River Boats of Roseburg, Ore., shut down operations following an FBI investigation into whether the company illegally inflated its inventory to obtain millions in financing from Wells Fargo Bank.

On April 1, the U.S. District Court for Oregon issued a warrant for federal investigators to search the company's computers and other files for evidence of fraud committed between December 2006 and February 2009.
"I have probable cause to believe, and do believe, that individuals operating on behalf of North River Boats and North River Marine committed violations of Title 18 United States Code 1343, fraud by wire, radio, or television," FBI special agent Kenneth Jameson said in the affidavit.
Company officials could not be reached for comment. The phone at the North River Boats factory has been disconnected.

The plant closed unexpectedly last Thursday, putting about 100 people out of work, according to a report from The News-Review. Employees were told earlier in the day that they could go home, with no immediate explanation.

The employees were later told to return to the plant that afternoon, at which point they were told the plant was going to be shut down until further notice, the newspaper reports.

In addition to the boatbuilding plant, the company also has four retail outlets under the name North River Marine. In 2006, Wells Fargo Bank extended the retail company an $8 million working capital line-of-credit so North River Marine could obtain financing for its business operations, according to the affidavit. Wells Fargo maintained a secured interest in North River Marine's accounts receivable and inventory.

In October 2007, the line-of-credit was increased to $10 million.
On Feb. 13, 2009, Wells Fargo called the company's owner, Brian Brush, and told him they had trouble verifying certain invoices and requested his cooperation to address the issue, the affidavit states. The FBI says Brush refused to cooperate and said he did not want to make his customer base nervous.

Because of Brush's lack of cooperation and his inability to verify invoices, Wells Fargo closed North River Marine's line-of-credit loan. North River Marine closed Feb. 28 and surrendered its assets to the bank. The bank estimates its loss at about $3.3 million.

On March 5, North River Boats posted a notice on its Web site regarding the closing of its retail outlets.
"This is by not means a portent of things to come," the company said in the March 5 notice. "North River Boats is on solid footing and this is simply a necessary step that we are taking to ensure our viability and profitability in the future."
The notice goes on to say, "In the current economic and political environment, our stores could not be competitive and produce a profit" and refers to the store closings as a "restructuring."
According to the FBI affidavit, however, Wells Fargo learned that North River Marine included possible fraudulent invoices in its weekly collateral reports. The bank told investigators that North River Marine listed as assets certain boats and motors that had already been purchased by customers or were owned by other companies.
"By including these items in the weekly collateral reports, North River Marine artificially inflated its available eligible collateral and, in turn, the amount of financing Wells Fargo provided to North River Marine," the affidavit states.

North River Boats has been in business since 1974. Brush purchased the aluminum boat manufacturer in 1997. According to the company's Web site, North River Boats increased production under Brush's leadership from a high of 83 boats per year in the early 1990s, to 1,200 boats last year, when it had up to 200 employees.


Sad deal for the honest employee's...

[bc22]

North River has been the benchmark for welded alum. boats and it is sad to hear that they have come to this point.

I hope someone will pick them up an continue with building good boats.

[Kamper]

For those not familiar with the term "out of trust..." It means they haven't reported all their sales to their creditor (bank, factory, uncle Bob).

Merchandise on the lot, is considerred an asset. The value of your assets impacts your credit rating. Loans have mechanisms to adjust interest, payments and other terms, based on stock on hand because it can be re-possessed by the lendor with less hassle than locating cash, or banks accounts. They can still sue for liquid assets but lendors like to know what they can (literaly) get their hands on if they are worried about the merchant.

It's normal for a merchant to be a little out of trust because of the lag between making a sale and reporting it. I'm sure lendors do have methods to catch it when it becomes an abuse, like driving past the lot that's half-filled when it should be crammed!

That's all I think I know about that.

[TimW Texas]

As if that state needs more, sorry to hear this for the workers and there family's.