Lakeside Motor Sports accused of defaulting on loans worth more than $1 million

STANTON, Mich. — The owners of Lakeside Motor Sports and Nelson’s Speed Shop face a lawsuit that claims they defaulted on more a million dollars in loans.

Union Bank and Lake Osceola State Bank say the recent closure of the two locations for several days signaled the company will not be able to make scheduled payments on the loans.

The banks also claimed in the lawsuit that another lending institution found evidence the owners were engaged in a check kiting scheme. Check kiting is defined as a person or business transfers money between multiple accounts to artificially inflate the balance in those accounts, according to the U.S. Department of Justice. The scheme results in banks honoring checks that do not have actual funds behind them, eventually leading to a bounced check and the bank losing the amount for the bad check.

Check kiting is illegal under both state and federal law.

Deputies from the Mecosta County Sheriff’s Office were at the Lakeside Motor Sports location outside Mecosta during the closure. Sheriff Brian Miller told FOX 17 they were following up on a larceny complaint the business filed. That investigation had no ties to the closure, according to the sheriff.

When contacted, Mitchell Richter, one of the co-owners, told FOX 17 during the closure that both locations would re-open under normal operations the following week.

That next Monday, September 23, Nelson’s Speed Shop did open, but a manager told FOX 17 the location was open only in a limited capacity.

WXMI/Jim Sutton

Lakeside’s accounts are currently frozen, according to the lawsuit.

Along with the lawsuit, Union Bank also requested a Temporary Restraining Order to prevent Lakeside from selling, trading, or destroying its inventory. The bank says part of its loan agreement allows it to take ownership of many of the company’s vehicles and boats. Those vehicles were listed as collateral, but the bank worries they could be moved off the property and hidden.

WXMI/Jim Sutton

Judge Ronald Schafer granted the restraining order.

Arguments on whether the order should be turned into a more permanent injunction are scheduled for October 9.

Follow FOX 17: Facebook – X (formerly Twitter) – Instagram – YouTube