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Mug Shot Monday — SBA 504 Loan Borrower Gets 3 Years for Fraud

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August 4, 2014

By Bob Coleman
Editor, Coleman Report

fruitsectionDanny Ray Butler faked the equity injection of a grocery store he built in Tuscaloosa, Alabama and ripped off SBA for $1.7 million when his SBA 504 loan failed.

“This defendant proved himself to be a prolific schemer,” Assistant U.S. Attorney George Martin said. “He counterfeited documents, he altered documents, he forged documents. He lied to people’s faces.”

From Danny Ray’s plea deal, “Almost immediately after construction was complete, defendant Danny Ray Butler and Fosters Groceries defaulted on the loans by failing to make payment to SBA and West Alabama Bank and Trust as promised. West Alabama Bank and Trust foreclosed on the property and sold it at auction for the approximate amount of West Alabama’s part of the loan. SBA suffered a loss of over $1.7 million.

“From March 2010, and continuing to October 2012, defendant Danny Ray Butler devised a scheme and artifice to defraud SBA and to obtain money and property belonging to SBA by means of materially false and fraudulent pretenses, representations, and promises.

“On June 7, 2010, defendant Danny Ray Butler submitted to SBA a Construction Cost Proposal from Turnipseed Construction, Inc. for the Fosters Groceries project well knowing that he had altered the Construction Cost Proposal by increasing the total project cost stated in the Proposal from $2,292,000 to $4,234,000.

“On October 27, 2011 defendant Danny Ray Butler submitted to SBA, as evidence of his cash injection, a copy of check as if the check had been issued to the payee for work related to the construction of Fosters Groceries and had been processed by the bank well knowing that the check was false, had not been issued to the payee, and had been altered to give the appearance that it had been processed by the bank.”

He is free on bond and must report to prison by September 1.

 

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