Fraud Friday — Loan Broker Pleads Guilty to Bribing SBA Department Manager

May 20, 2016

By Bob Coleman
Editor, Fraud Friday

bribeJocelyn J. Brown, a loan broker for the now-defunct San Diego-based La Jolla Bank, has pled guilty to making false statements in relation to an investigation into bribes paid to the bank’s Vice President and SBA lending department manager Amalia Martinez.

As part of her guilty plea, Brown admitted that she paid cash bribes in return for the banker’s assurance that the loans Brown referred would be approved and funded, and, therefore, that Brown’s commissions would be paid. Brown collected tens of thousands of dollars in referral fees from La Jolla Bank, and kicked back a portion to the bank manager, in cash, every time she was paid.

La Jolla Bank opened its SBA lending department in 2005. In February 2010, the bank failed, and was taken over by the FDIC. At the time of its failure, the bank had outstanding debt of over $1 billion, which the FDIC absorbed—and ultimately passed on to the American taxpayers.

According to the plea agreement, Brown worked as an unofficial broker for La Jolla Bank, referring business loan customers to the bank’s SBA department. As part of this job, Brown helped her borrowers compile their loan application packages and submit them to the bank. In return for generating business, La Jolla Bank paid Brown a commission or referral fee, calculated as a percentage of each loan she referred.

Brown admitted that in 2006, Martinez asked her to kick back a portion of her commissions, in cash, after her clients’ loans were funded. In turn, Martinez would make sure that Brown’s clients’ loans were approved so that Brown could collect commission payments, regardless of the soundness of the loans and their benefit to the bank. In addition, the Martinez arranged to pay Brown a fraudulent $30,000 “commission” for a loan she in fact had no part in brokering. Brown went so far as to generate a fake invoice, pretending that she had earned the commission.

Brown admitted that she lied to law enforcement agents by concealing these bribe payments and hiding her relationship with Martinez. During the investigation, she told federal agents, falsely, that she never saw Martinez accept money in exchange for loans. And despite the fact that she and Martinez traded several phone calls and text messages and had a sit-down meeting in June 2014, Brown falsely reported to federal agents in September 2014 that she had not spoken to or seen Martinez since before she learned about the federal investigation.

In her plea agreement, Brown acknowledged that her false statements significantly impeded the investigation of Martinez.

Since then, however, Martinez has pleaded guilty to accepting bribes, and admitted that she and other senior La Jolla Bank executives accepted hundreds of thousands of dollars in cash bribes and kickbacks from borrowers in return for issuing hundreds of millions of dollars in loans.

The bank management issued the loans knowing that the borrowers were unqualified and unlikely to repay, and their mismanagement contributed to the bank’s billion-dollar collapse. Martinez admitted that she participated in a conspiracy with the bank’s senior executives to line their own pockets with bribe money.

Two other defendants have been charged in related cases. SBA borrower Annand Sluman pled guilty and admitted paying cash bribes to Martinez in return for several SBA loans he was issued between 2006 and 2008. By 2008, Sliuman was not financially qualified to borrow money, so he submitted fraudulent documents as part of his loan application that made his businesses appear to be financially sound. Sliuman’s assistant, Laura Ortuondo, assisted in creating the fraudulent loan documents. She pled guilty to making false statements to investigators about her involvement in the case; as part of her plea, she also admitted that she destroyed evidence and instructed her then-husband to testify falsely on her behalf to help cover up the crime.

Brown is scheduled to be sentenced on July 19, 2016.