[Hedley Lamarr]

A great example of why you should know your customer, know your referral sources, and know your sources of capital.







Three former executives of Valley Bank in Moline, Illinois, and the President of Vital Financial Services, a lender service provider, all pleaded guilty to scheming to defraud the SBA through programs that guarantee small business loans. They are being charged with conspiracy to commit wire fraud affecting a financial institution.

Michael Slater, Larry Henson, Andrew Erpelding, and Susan McLaughlin, all residing in Iowa, conspired together to fraudulently obtain loan guarantees on behalf of Valley Bank borrowers. With the knowledge that the loans did not meet SBA guidelines and requirements for the guarantees, the group altered loan payment histories, renamed the businesses, and hid that the borrowers had previously defaulted on loans in order to guarantee the small business loans. After the borrowers defaulted on the fraudulently guaranteed loans, the conspirers requested reimbursement from the SBA. The SBA would purchase the defaulted loans from lending institutions and investors, and the SBA would shoulder a majority of the losses on the ineligible loans.

The defendants attempted to obtain guarantees on over $14 million in ineligible loans. Of the $14 million, they had success in obtaining guarantees on more than $9 million of the loans. As a result, the SBA now faces losses of over $4.5 million. Each of the four defendants faces a maximum sentence of 30 years in prison. A federal district court judge will consider the U.S. Sentencing Guidelines and other statutory factors before determining the sentences for the fraudsters.

This case bears a striking resemblance to the crimes of the banc-serv defendants who were all successfully found guilty after a week and a half long trial. The SBA Office of Inspector General has published reports addressing these issues and provided recommendations for the SBA to follow in order to prevent further crimes from lenders and lender service providers.

Source:
DOJ Press Release

[Franklin]

A great example of why you should know your customer, know your referral sources, and know your sources of capital.




Source:
DOJ Press Release

In theory, your statement is correct, but how would anyone have known those individuals were involved in those types of activities, it's not like they were doing it out in the open, and before this news came out, they had decent reputations.










www.UccRadar.com

[Hedley Lamarr]

In theory, your statement is correct, but how would anyone have known those individuals were involved in those types of activities, it's not like they were doing it out in the open, and before this news came out, they had decent reputations.










www.UccRadar.com

If you have been around for awhile you can usually get a sense that someone could be dirty or should at least do some homework. It's interesting that they went after the banker and the advisor/broker..........