Fraud Friday — SBA Loan Broker Jailed for 9 Years in $100 Million 7(a) Loan Fraud

June 14, 2019

By Bob Coleman
Editor, Fraud Friday

Fraud Friday — SBA Loan Broker Jailed for 9 Years in $100 Million 7(a) Loan Fraud

“Our financial system is based on trust,” says U.S. Attorney Robert K. Hur. “Loren Park and his co-conspirators lied during every aspect of the loan process, cheating taxpayers and lenders, causing more than $100 million in losses, and hurting the chances of future small business owners to obtain loans. I am grateful for the patience and diligence of our law enforcement partners to get Loren Park back from South Korea and bring him to justice.”

Loren Park was a fugitive for eight years and was extradited from South Korea to face these charges.

According to his plea agreement Loren Park and his brother, Joon Park, owned and operated Jade Capital. Jade Capital brokered small business loans, among other services, for clients and on behalf of Loren Park, Joon Park, and their family. Loren and Joon Park encouraged prospective borrowers using the services of Jade Capital to apply for SBA 7(a) loans.

Loren Park admitted that from 2003 until October 2011, Jade Capital submitted SBA loan applications and supporting documentation to loan originators and underwriters on behalf of their clients that contained fraudulent documents, including:

  • Bank statements for borrowers that were altered to make it look like the borrowers had more cash to inject into the business they were buying than they in fact did
  • Counterfeit cashiers’ checks
  • Fake gift letters that made it look like the borrowers had more assets at their disposal to use as down payments than they did
  • Fabricated resumes that made it look like the borrowers had more experience running the businesses they sought to purchase than they did
    Fake tax returns that made it look like the borrowers had greater income than they did
  • Phony interim financial statements that made other businesses the borrowers owned look more profitable than they were
  • Loren and Joon Park charged a loan brokerage fee to both the financial institutions and the borrowers for assembling and submitting loan application packages that resulted in the issuance of SBA-guaranteed loans.

The fees charged to borrowers were hidden from the financial institutions underwriting the loans.

The Parks also had undisclosed ownership interests in businesses involved in some of the transactions and received loan proceeds, unbeknownst to the lenders, in a number of transactions. In one instance, the Parks did not have an ownership interest in a company involved in a transaction but persuaded the seller to assign some of the loan proceeds to them and then converted those proceeds to their own personal use.

Loren Park was on a business trip to South Korea when he learned that he had been indicted in this case. Loren Park had intended to return to the United States, but after learning that he had been indicted, he chose not to return and not face the charges pending against him. Subsequently, he also made several public information requests to the FBI, from South Korea, requesting his criminal record in order to determine whether there were still charges pending against him.

On June 20, 2013, co-defendant Joon Pak was sentenced to 15 years in prison and ordered to pay restitution of $91 million.