Fraud Friday – FDIC Seeks Removal of Two Bank Executives & a Referral Agent for SBA Loan Scheme

April 7, 2023

Delaney Sexton
Contributing Editor

Fraud Friday – FDIC Seeks Removal of Two Bank Executives & a Referral Agent for SBA Loan Scheme

The FDIC issued a Notice of Charges against three individuals. Robert S. Catanzaro was the CEO, a Director, and a Principal Shareholder at Independence Bank in Rhode Island. Danielle Desrosiers was an EVP at the bank. The final party in the Notices was John Ponte, the sole owner and President of Ponte Investments, LLC.

The FDIC’s intentions are to remove them and prohibit their participation in bank affairs. Robert Catanzaro is ordered to pay a $400,000 civil money penalty for his violations, practices, and breaches. Desrosiers was ordered to pay a $128,000 civil money penalty. In addition to a $74,000 civil penalty, Ponte could be ordered to pay restitution of up to $326,000.

According to the Notices, Independence Bank’s business strategy was to originate SBA Small Loan Advantage 7(a) loans. The bank was granted delegated authority to make eligibility determinations on the loan.

The Bridge Loans Scheme

The Notices state that Ponte referred small business borrowers to Independence Bank for SBA loans. While these loans were awaiting approval, Ponte directed his employees to offer bridge loans to all applicants. These bridge loans had per annum rates of 50-100% and often targeted small businesses in weak financial condition.

The Notices allege that once the bank approved the SBA loan, Ponte would arrange for the bridge loans to be paid from loan proceeds effectively shifting the risk to the bank and the SBA. Catanzaro and Desrosiers were aware of this scheme and would aid in its execution. They made false certifications, submitted applications with inaccurate information, and ensured bridge loans were not documented in bank records.

There were 201 loans that had been referred by Ponte and had undisclosed bridge loans.

Afterward, the bank sold the guaranteed portion of the loans on the secondary market for a significant profit, which not only benefited the bank, it also benefited Catanzaro who had more than 50% ownership in the bank. Derosiers gained from the scheme because she received payments for her participation. Ponte received broker or referral fees that often exceeded the permitted amount that the SBA allows. In addition, Ponte received an “Overall Business Analysis” fee. Once again this impermissible fee further exceeded the total amount allowed by the SBA.

Of the 201 loans, 44% defaulted, and the bank was able to charge-off $1.6 million. Ultimately, SBA suffered an estimated loss of $8.8 million on the guaranteed portion of the loans.

FDIC Notices