stickyimage

Fraud Friday — Two Rockford Bank & Trust SBA VPs Indicted for SBA Loan Fraud

May 12, 2017

Fraud Friday — Two Rockford Bank & Trust SBA VPs Indicted for SBA Loan Fraud

By Bob Coleman
Editor, Fraud Friday

Jim Graber, 57, Senior Vice President at Rockford Bank and Trust Company
Kristin King, 45, Vice President and Government Lending Manager at Rockford Bank and Trust
(Source: LinkedIn)

A Federal Grand Jury accuses Kristin King of signing SBA Form 1086 and falsely certifying “the 7(a) loan was underwritten, closed and serviced in accordance with all SBA loan program requirements.”

According to the grand jury indictment, SunLee Development owned a commercial building at 4001 North Perryville Rd., in Loves Park, IL. SunLee had three loans totaling more than $3 million with Rockford Bank & Trust.

SunLee was constantly behind on making its loan payments to the bank because tenants at 4001 North Perryville were “not paying their rent.” Delinquent payments soared to $65,000, “almost 90 days past due.”

Ryan Cole, 45, was the guarantor of the three SunLee loans.

He also was indicted with the Rockford bankers on fraud and lying to the SBA charges this week.

The Feds allege that Cole organized a group of the tenants at 4001 North Perryville to apply for an SBA guaranteed loan and purchase the building from SunLee. The group of tenants and Cole became known as the Perryville Investment Group.

The indictment alleges that on March 16, 2012, Cole, Graber and King submitted a $3,980,000 loan application to the SBA for the Perryville Investment Group that they knew contained the following false statements and disclosure failures to SBA:

  • The SBA loan would pay off Rockford Bank & Trust delinquent loans
  • The SBA 7(a) loan would reduce the exposure of a loan loss to Rockford Bank & Trust
  • Cole was the guarantor of the three loans to be paid off to Rockford Bank & Trust
  • Cole had an ownership interest in Perryville Investment Group
  • The listing of monthly rental income that would cover the monthly loan payment (projections) was bogus
  • The loan application understated Cole’s liabilities as it ignored his personal guaranty of the bank debt
  • Loan proceeds paid off past due taxes and liens
  • $69,450 of loan proceeds went to Cole and deposited in his Rockford Bank & Trust bank account

“It was further a part of the scheme that defendants would and did misrepresent, conceal, and hide, and cause to be misrepresented, concealed, and hidden, the acts and the purposes of the acts done in furtherance of the scheme to defraud.”

“Defendants herein, for the purpose of executing the aforesaid scheme to defraud and to obtain money and property by material false and fraudulent pretenses, representations, and promises, and attempting to do so, such scheme affecting a financial institution, knowingly caused SBA’s Hazard, Kentucky Standard 7(a) Processing Center to transmit an electronic datafax letter to [Rockford Bank & Trust] in Rockford, Illinois confirming receipt of the Perryville Investment Group’s 7(a) loan application.

“In violation of title 18, United States Code, Section 1343.”

Shortly after loan closing, the Perryville Investment Group had trouble making payments on its SBA loan and defaulted.

Cole is charged with two counts of making false statements to the SBA on a loan application.

Graber and King are each charged with one count of making false statements to the SBA on a loan application.

“Each count of wire fraud and making false statements and concealing material facts to the SBA carries a maximum penalty of up to 30 years in prison, a fine of up to $1 million, and restitution.”

Jim and Kristin are scheduled to appear for arraignment today, at 2 p.m. in federal court in Rockford, Illinois before U.S. Magistrate Iain D. Johnston.

Rockford Bank & Trust approved 34 SBA 7(a) loans for $9.7 million, ranking 344th on the Coleman Report 500 last year.

4 months ago by in . You can follow any responses to this entry through the | RSS feed. You can leave a response, or trackback from your own site.