Lindsay's Uncle Arrested for Alleged Scam

By Stephen M. Silverman

Originally posted Wednesday June 22, 2005 08:00 AM EDT

Lindsay Lohan Photo by: STEWART COOK / REX

There's more legal trouble in Lindsay Lohan's family: Her uncle, Paul Sullivan, was arrested at his Long Island, N.Y., home Tuesday on suspicion of mail fraud involving funds targeted for post-9/11 small-business relief.

In July 2002, Sullivan, 47, president and CEO of the Ropa Group Corp. (and the brother of the Mean Girls and Herbie: Fully Loaded star's mother, Dina), had applied for a $1.5 million loan from the U.S. Small Business Administration, the criminal complaint states.

Among its claims, the Ropa Group said it was the exclusive agent for the Hyundai Motor Co. to the United Nations. After the government reportedly granted Ropa a loan of $646,900, Sullivan cashed checks in the amounts of $70,300, $80,000 and $61,300 – only the company's debtors were never paid and the endorsements on the debtors' checks had been forged, the complaint said.

Sullivan, 47, was arraigned Tuesday in U.S. District Court in Central Islip, Long Island, and released on $250,000 bond, authorities said.

"Everything is fine," Sullivan told New York's Daily News. "It's a misunderstanding."

Sullivan's brother-in-law, Lindsay's father Michael Lohan, was recently sentenced to four years behind bars for drunken driving, contempt of court and assaulting another relative.