December 16, 2016
Fraud Friday — Nik Patel Pleads Guilty to $179 Million USDA B&I Loan Fraud
By Bob Coleman
Editor, Fraud Friday
Nik Patel has pleaded guilty to five counts of loan fraud in connection with the sale of $179 million in sham USDA b&i hotel loans to Pennant Management.
Nik was the Chief Executive Officer of First Farmers Financial when the company sold three fabricated loans totaling approximately $20 million to a Tennessee-based investment firm, and 26 fabricated loans to a Milwaukee investment firm for $179 million.
Between November 2012 and September 2014, Patel created false documents sent to the investment firms in support of these loans. Patel submitted documents to the Milwaukee investment firm that falsely created the appearance that his company had lent money to borrowers in Florida and Georgia – in amounts ranging from $2.5 million to $10 million – and that a portion of the loans were guaranteed by the USDA.
All 26 loans were completely fabricated with no actual borrower, no pre-existing loan, and no government guarantee.
First Farmers’ president, Timothy Fisher, was also convicted in connection with the fraud. Fisher, of Pasadena, Calif., pleaded guilty last month to one count of money laundering. Fisher faces up to ten years in prison when he is sentenced on May 4, 2017.
Evidence in the case revealed that Patel created fictitious business names and false USDA loan identification numbers, and forged the signatures of USDA employees and purported borrowers.
Patel also assisted in creating false financial documents, including what purported to be a certified audit by a fictitious accountant that he submitted to the investment firm to obtain the funds.
Pennant Management suffered a loss of $179 million, before the receiver sold off legit Patel hotel properties.
Although a portion of the funds were used to make interest payments to the investors, the bulk of the funds were used to pay existing debts, acquire assets, pay personal expenses, invest in other unrelated businesses, and repurchase loans that Patel had previously sold to the Tennessee investment advisor.
Patel faces the obligatory sentence of hundreds of years in prison and millions of dollars in fines when sentenced on April 6 of next year.