Fraud Friday – Bank CEO Sentenced to a Year for SBA Loan Guarantee Fraud

October 14, 2022

Delaney Sexton
Contributing Editor

Fraud Friday – Bank CEO Sentenced to a Year for SBA Loan Guarantee Fraud

“As CEO, Edward Shin was entrusted with stewardship of a Pennyslvania-based bank. Instead of promoting and protecting the bank’s interests, Shin used the bank as his own piggy bank, stealing from it to line his pockets and the pockets of his corrupt friends. For violating the trust placed in him, Shin will rightly serve prison time,” says U.S. Attorney Damian Williams.

Last week, the Department of Justice announced that Edward Shin, a former bank CEO, was sentenced to 14 months in prison for his role in defrauding the bank. Between 2009 and 2013, Shin solicited and received bribes in relation to SBA-guaranteed loans at the bank, and he caused the bank to issue loans for companies that Edward had a secret ownership interest in.

During the origination process, Shin would work with a friend of his to generate a broker fee on SBA loans that did not require the involvement of a broker. Although the broker did no work to gain commission, he would obtain the broker fee and split it with Edward.

Despite the clear violation of SBA regulations and procedures, Edward Shin caused the bank to offer SBA-guaranteed loans to multiple businesses he had an ownership interest in. In 2010, the bank disbursed an almost $1 million loan to a business. Although the documents did not disclose this, Shin, the broker, and another person operated the business as a partnership. The loan defaulted and cost the bank over half a million dollars. In another example, the bank issued a $1.05 million guaranteed loan to a business that was operated as a partnership with Edward and one of his family members. Both their relationship and Edward’s role in the business were not disclosed.

He was convicted on all counts including one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution, one count of conspiracy to commit bank bribery, one count each of conspiracy to commit loan fraud and to commit bank fraud, and one count each of bank bribery and embezzlement of funds by a bank officer. He also received a sentence of three years of supervised release and the forfeiture of $5.5 million after the three-week trial.

DOJ Release