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Fraud Friday– Update on Noah Bank CEO Fraud Scheme

November 8, 2019

By Caity Witucki
Contributing Editor, Fraud Friday

Fraud Friday– Update on Noah Bank CEO Fraud Scheme

SIGTARP’s latest report to Congress details the investigative results of twelve financial institution fraud schemes, including an update on the arrest of Noah Bank CEO, Edward Shin.

The report claims that between 2009 and 2012 Shin served as the CEO of Noah Bank. During that period, the bank offered SBA-guaranteed loans to small businesses in the New York and New Jersey area. Notwithstanding SBA regulations, Shin allegedly solicited and received bribe payments in connection with the SBA-guaranteed loans issued by Noah Bank and caused the bank to extend its SBA-guaranteed loans to companies in which Shin had secret ownership interests.

The criminal complaint brought against Shin specifically alleges that when the bank issued business loans involving one broker, Shin arranged to receive a portion of the broker’s fee. Furthermore, when the bank issued business loans that did not require a broker, Shin arranged to have the same broker inserted unnecessarily into the transaction. Although the broker did no actual work to earn a commission on those transactions, he split the “broker’s fee” with Shin as an illegal kickback.

The complaint further alleges that around December 2010, the bank issued a $950,000 SBA loan to a business in New York. Although documents submitted to the bank for purposes of securing the loan did not mention Shin’s ownership interest, the business was a 50-50 partnership between Shin and the broker. After the loan was issued, it went into default status, resulting in a loss of approximately $611,491.

According to court records, Shin is still under investigation by SIGTARP, the FDIC, Homeland Security, the SBA OIG, and the FBI. A formal indictment was entered on July 31, 2019, and the case was assigned to the U.S. Attorney’s Office for the Southern District of New York. On August 2, 2019, Shin pleaded not guilty to all charges brought against him. Shin has not yet been convicted and is presumed innocent until proven guilty. His trial date has not yet been set.

Sources:
Complaint
Department of Justice
SIGTARP Quarterly Report

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