Fraud Friday – Bank of America SVP Demanded Six Figures in Bribes in exchange for $8 Million Loan, Says Indictment
March 18, 2022
Delaney Sexton
Contributing Editor
Fraud Friday – Bank of America SVP Allegedly Solicited Bribes to Advise an $8 Million Fraud Scheme
Kurt Phelps was indicted this week with one charge of conspiracy to commit bank fraud and one charge of bank bribery after allegedly obtaining hundreds of thousands of dollars in bribes for helping a company defraud the bank he was working at. The other three co-conspirators involved in the fraud scheme pleaded guilty in October 2020, the same day of Kurt’s arrest.
A now-defunct New Jersey printing company, Starnet Business Solutions Inc., sought a $1.5 million line of credit using false financial information in 2013, and over the course of around five years, that line of credit was increased to $8 million in 2018 with the help of Phelps. The repayment for the line of credit was due in 2019, but the line of credit was never repaid.
The three co-conspirators would draft financial information and allegedly send it to Kurt for feedback before submission. In a text conversation occurring in March 2014, one of the co-conspirators texts, “I have the preliminary numbers. Where should I send them.” Kurt responds with, in verbatim, “To me work email”, and follows with, “Send it to my personal email first.”
In February 2017, Phelps messages the same co-conspirator, “ARs [accounts receivable] seem a bit low?” He later instructs, “If you can raise a bit would br better […] Up the receivable a bit […] Couple hundred thousands.”
In addition, he allegedly ensured that the bank would not detect the fraud scheme by helping Starnet avoid audits and other quality control measures.
Documents show that Phelps texted the co-conspirator in February 2014, “Get me the finsncials and let me see what I can do with or friend […] I have an idea. But we need to get this done before he leave. Especially the no audit thing. You know what I mean.” About a month later, he messages, “OK we did it. No audit for two years unless company revenues drop 10% or more and or has a net loss […].”
Each bribe Phelps received was said to have consisted of tens of thousands of dollars in cash and was hand-delivered in FedEx envelopes. In more messages, Phelps texts that he is paying cash bribes to other employees at his bank, allegedly. The court documents claim that in exchange for the avoidance of the audit, “[A]ss clown wants 14 […] I said no. Got him to 10.” Kurt is allegedly referring to a $10,000 bribe payment. A few days later, Kurt messages, “Do it the same as last time. 3 in one envelope and 10 in another envelope put both into a fed ex envelope […].”
The Criminal Complaint documents also provide text exchanges implying that Kurt had orchestrated similar fraud schemes with other Bank of America clients.
The indictment requires Kurt to forfeit any money or property that resulted from the alleged bank fraud and bribery scheme. Each of Phelps’ charges carries a maximum sentence of 30 years and prison and a fine of $1 million or twice the gross gain or loss from the offense, whichever is greatest.
Read our previous reporting:
Fraud Friday — Bank of America Executive Arrested in $8 Million Bank Fraud and Bribery Scheme
Sources:
Indictment
DOJ Indictment Press Release
Criminal Complaint