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Fraud Friday – banc-serv Second Loan Case Study

September 13, 2019

By Caity Witucki
Contributing Editor, Fraud Friday

Fraud Friday – banc-serv Second Loan Case Study

This article is the second in a series of articles detailing each fraudulent loan listed on the Kerri Agee indictment.

In October 2007, a banc-serv employee allegedly prepared an SBA 7(a) loan application on behalf of an unnamed borrower for $350,000. A few days after the application was submitted, the SBA faxed banc-serv a letter of denial which stated that the borrower’s business was too large to qualify for an SBA loan due to an affiliate business. The letter of denial also stated that the proceeds of the 7(a) loan could not be used to pay the affiliate business’ ineligible debt.

Under Kerri Agee’s supervision, the banc-serv employee who had prepared the 7(a) loan application allegedly contacted an SBA official and falsely told them that the borrower’s affiliate business had ceased operations earlier that year.

The SBA official responded saying, “based on the information that the affiliate ceased operations in the 1st quarter of 2007 and no longer exists, it would appear that we do not need to count the affiliate for SIZE.”

Later that day, the banc-serv employee allegedly emailed Kerri Agee stating that she “fibbed [to the SBA official] to get this one done.”

Shortly after the application was approved, the SBA began asking banc-serv questions about recent transactions that appeared to be associated with the affiliate business. To avoid detection, banc-serv allegedly withdrew the borrower’s application and resubmitted it under a slightly altered fictitious company name. Once the new 7(a) loan was approved, banc-serv allegedly submitted an addendum to change the name back to the correct business name.

According to the indictment, in August 2012, Kerri Agee prepared a loan settlement statement and authorization containing misrepresentations about the proceeds of the loan and size of the borrowing company. The SBA then purchased the outstanding balance on the borrower’s loan.

The case against Agee and her co-conspirators is pending in the Indiana Southern District Court. Agee has not yet been convicted.

Sources:

The United States Department of Justice

Indictment

Read our previous reporting:

“They Got Us” Swapping Business Owners — September 6, 2019

Fraud Friday – “Working Capital” Fits better than “Past Due Payroll Taxes” — August 30, 2019

“They Got Us” CEO of banc-serv Indicted for $10 Million Loan Fraud Scheme” — August 23, 2019

Banc-Serv’s Kerri Agee, 4 others Arrested for $10 Million SBA Loan Fraud — March 22, 2019

Kerri Agee out of banc-serv — April 13, 2018

Newtek Forecasts Zero Earnings from banc-serv — November 3, 2017

Banc-Serv Retains Brent Ciurlino, Appoints Karen McHugh EVP — October 19, 2017

Uh Oh, FBI Raids Banc-serv Campus, Locks Doors — October 13, 2017

Newtek Stock Down 10%, Says FBI Executed Search Warrant on Banc-serv — October 13, 2017

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