May 31, 2019
By Bob Coleman
Editor, Fraud Friday
Fraud Friday — Noah Bank CEO Arrested for SBA Loan Fraud
U.S. Attorney Geoffrey S. Berman says this past Wednesday, “Edward Shin, the CEO of a Pennsylvania bank, allegedly exploited his position as a bank officer to illegally issue Small Business Administration loans to entities in which he had a financial interest. Furthermore, Shin allegedly took kickbacks on commissions for those loans from a third party who did no legitimate work in the loan process. The Small Business Administration exists to provide funding to those pursuing the American dream through owning their own businesses. Edward Shin is now charged with attempting to corrupt that process for his own personal gain.”
The Feds say, Edward Shin, 56, secretly solicited and received bribe payments in connection with SBA-guaranteed loans issued by Noah Bank and caused the bank to extend SBA-guaranteed loans to companies in which Edward had secret ownership interests.
Specifically, when the Bank issued a business loan involving a broker, Shin secretly arranged to receive a portion of the Broker’s fee. On other occasions, when the Bank issued a business loan that did not involve the use of an actual broker, Shin arranged to have the Broker inserted unnecessarily into the transaction solely to generate a broker fee that could be shared with Shin; in fact, the Broker did no actual work to earn a commission on those transactions, but split the “broker’s fee” with Shin as an illegal kickback.
The Feds further allege Shin arranged for the Bank to issue SBA-guaranteed loans to businesses in which he secretly retained an ownership interest, in violation of SBA regulations and procedures. For example, in December 2010, the Bank issued an SBA-guaranteed loan for $950,000 to a business in New York, New York. Although documents submitted to the Bank for purposes of securing the loan did not mention Shin’s ownership interest, the business was secretly operated as a 50-50 partnership between Shin and the Broker. After the loan was issued in October 2014, this loan went into default status, ultimately resulting in a loss to the SBA of $611,491.
In FY 2018, Noah Bank placed 53rd on the Coleman Report 500 generating 99 SBA 7(a) loans for $96 million.
Noah Bank issues the following statement:
“Noah Bank is neither a defendant nor a suspect in relation to any of the alleged charges. The safety and soundness of the Bank is not at issue. The Bank will remain open and will conduct business as usual. The Bank’s deposits are insured by the FDIC up to the maximum extent allowed.
“In accordance with the Bank’s succession plan, Mr. Hyunjun An, the Bank’s Chief Financial Officer, has been named acting President of the Bank. The Bank does not expect the matters to have any material impact to its financial statements and the Bank is cooperating fully in the investigation.
“With its legal headquarters in Elkins Park, PA, Noah Bank is a Pennsylvania-chartered bank that was launched in 2004. At that time, Noah was named “Royal Asian Bank, a Noah Bank”, and changed its name to “Noah Bank” in 2011. Operational headquarters are in Fort Lee, New Jersey. Noah Bank provides banking products and services to businesses and consumers primarily in the Asian-American communities of Southeastern Pennsylvania, Northern New Jersey, Manhattan, New York and Flushing.”
Shin is charged with one count of conspiracy to commit bank bribery, which carries a maximum potential sentence of five years in prison, and one count each of bank bribery, theft of funds by a bank officer, and conspiracy to commit wire fraud, each of which carries a maximum potential sentence of 30 years in prison.