Multiple top officers at Honor Finance, an Evanston-based auto lender, were indicted on federal fraud charges last week after allegedly diverting $5.3 million to a GPS company they owned. The indictment was filed Wednesday in Chicago federal court.

Honor Finance CEO James Collins and chief operating officer Robert DiMeo, formed LHS Solutions, the GPS company, in 2011 with accountant Michael Walsh, who is also named as a defendant. Over the course of seven years, the men used LHS Solutions to purchase GPS devices, which were then resold to Honor Finance at a significant markup. The men would take the difference, according to the indictment.

The indictment alleges that LHS Solutions had no other purpose aside from purchasing and reselling the technology at a marked-up price. LHS Solutions also reportedly took commissions on vehicle warranty sales that should have been included in Honor Finance’s earnings.

Honor Finance required the installation of GPS systems in a portion of the vehicles it provided loans for in case borrowers defaulted on their loans, allowing the company to repossess the vehicles when needed. The indictment alleges that Collins, DiMeo and Walsh owned LHS Solutions without the knowledge of CIVIC Partners, a private equity firm that acquired a significant portion of Honor Finance’s loans in 2011. CIVIC Partners parted ways with Honor Finance in 2018.

DiMeo’s attorney, Daniel Radakovich, and Gene Murphy, Walsh’s attorney, both told the Chicago Tribune Friday they were reviewing the allegations with their clients.

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