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Mark Janbakhsh at Plaza Mariachi

Federal prosecutors on Thursday unsealed a 21-count indictment alleging local businessman and philanthropist Mark Janbakhsh of bank fraud and other charges.

Both Janbakhsh, the former owner of auto dealer Auto Masters, and Steven Piper, its former chief financial officer, were arrested Wednesday by FBI agents and are scheduled to appear before a magistrate judge in Nashville.

Prosecutors allege that the duo worked together to defraud Capital One and First Horizon by overvaluing Auto Masters property. Additionally, both are charged with making false statements under oath, and Janbakhsh is charged with witness tampering.

In 2017, according to prosecutors, Piper disclosed to Capital One that Auto Masters had overstated its collateral by more than $33 million and had drawn more than $26 million more from its line of credit than it was permitted to. A bankruptcy receiver later determined that Auto Masters had overstated its collateral by nearly $37 million.  

The alleged scheme involved counting delinquent car loans as current, using information from customers who had applied for loans but had been rejected and counting vehicles that had been repossessed or paid off.  

The witness tampering allegation is related to a claim that Janbakhsh promised a former Auto Masters portfolio manager more than $300,000 to flee and avoid testifying.

Both men face up to 30 years in prison and a $1 million fine.

In 2018, a federal bankruptcy judge found Janbakhsh in contempt after he sought to interfere with local auto dealer Ben Freeland’s takeover of Auto Masters assets. According to court filings, Janbakhsh sent armed guards from Plaza Mariachi, which he founded and owns, to the main Auto Masters lot to “forcibly [take] possession” of the facility.

Capital One argued in the bankruptcy proceedings that Janbakhsh and his family members stripped a “staggering” amount of the allegedly ill-gotten millions out of Auto Masters. That included more than $4.6 million related to construction and operation of Plaza Mariachi and Maz Fresco, the Latin market at the Nolensville Road entertainment and shopping center.

Janbakhsh also founded the Hispanic Family Foundation with his wife, Diane.

Janbakhsh and Piper representatives could not immediately be reached for comment.