July 30, 2021
Fraud Friday – banc-serv Borrower Testifies $50,000 Fake Equity Injection for Biz Aq Loan
Witness #7- Brad Crawford (Loan to Borrower #1 in the indictment)
Brad Crawford decided to buy a business in 2004, and Kerri Agee and Matt Smith prepared an SBA loan application worth $1,400,000 for him. The loan authorization required a $50,000 equity injection. He testified that he wrote a $50,000 equity injection check when he did not have the funds in his bank account and brought it the day the loan closed.
Crawford said the equity injection check would later be funded with money from the business he acquired. Around $65,000 of the loan was delegated to working capital, and $50,000 of the working capital later balanced the check that he wrote.
He testified that during the recession he defaulted on his loan and closed the business. The leftover assets were liquidated, and the SBA purchased the outstanding balance based on false documents.
After his business closed, he said that he went on to do sales and marketing for banc-serv. Crawford would approach banks/new clients and inform them of their services. There was an expectation that he needed to help banc-serv with their quick expansion, and Crawford would report directly to Kerri Agee.
Here’s a summary of the defense attorneys’ main arguments throughout the trial:
• During the Great Recession, the SBA was trying to rapidly increase loan volume to help stimulate and support main street. banc-serv helped community banks get money to these small businesses more efficiently.
• The SBA rules and guidelines were constantly changing and adapting. It was hard for everybody in the small business world to stay up to date with the SOP.
• There was not enough training provided for lenders, LSPs, and employees.
• Emails “might not be telling the entire story”. They lack context, and a person’s intention will not always be seen through this form of communication. Also, when someone is copied on an email it does not necessarily mean that they read it.