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Fraud Friday– Fraud Investigation Damages the Reputation of Innocent Employees

December 20, 2019

By Caity Witucki
Contributing Editor, Fraud Friday

Fraud Friday– Fraud Investigation Damages the Reputation of Innocent Employees

Rockford Bank & Trust was a successful lending institution prior to the fraud allegations brought against the company’s Senior Vice President, Jim Graber, and Vice President, Kristin King in 2017. In 2016, Rockford Bank & Trust approved 34 SBA 7(a) loans for $9.7 million, earning the institution recognition on the Coleman Report 500. However, the recent multi-year fraud investigation has damaged the integrity of the bank and its employees despite all of the charges being dismissed on December 9th, 2019.

The false fraud allegations claimed that on March 16, 2012, Graber and King submitted a $3,980,000 loan application to the SBA that they allegedly knew contained false statements and disclosure failures. King became associated with the fraud allegations when she sent emails which certified that she believed the contents of the loan application were true and correct.

Shortly after the $3,980,000 loan closed, the borrower had trouble making payments. According to the borrower, tenants at the commercial property purchased with the SBA loan were “not paying their rent.” As a result, delinquent payments soared to $65,000 and the borrower was forced to default.

The early default led authorities to believe King’s email was part of a fraud scheme devised by Graber and the borrower. Consequently, King, Graber, and the borrower were indicted on charges that held a 30 year prison sentence and a fine of up to $1 million per person. The charges falsely alleged:

  • The borrower’s ownership interest, liabilities, and monthly income were falsified or understated.
  • The loan was intended to pay off the bank’s delinquent loans.
  • The loan proceeds were intended to pay off past due taxes and liens

Just one month before the trial against the two Rockford Bank & Trust employees and the SBA borrower was scheduled to begin, Illinois Justice, John Z. Lee, granted the United States’ motion to dismiss the superseding indictment with prejudice. Since the case was dismissed with prejudice, all the charges were dropped and the government will never reopen the case.

Although the case was dismissed with prejudice, the false allegations have effectively ruined the reputation of Rockford Bank & Trust and its employees. On November 30, 2019, Rockford Bank & Trust merged with Illinois Bank &; Trust and is now doing business exclusively under the name “Illinois Bank & Trust”. Jim Graber and Kristin King are no longer listed as employees on the bank’s website.

Sources:
Greenberg Traurig, LLP
Acquisition Press Release

Previous Reporting
Fraud Friday — Two Rockford Bank & Trust SBA VPs Indicted for SBA Loan Fraud
Fraud Friday — What You Can Learn from the Rockford Bank & Trust Fraud Case
Fraud Friday– All Federal Charges Dismissed Against James Graber and Kristin King

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