October 11, 2019
By Caity Witucki
Contributing Editor, Fraud Friday
Fraud Friday — What You Can Learn from the Rockford Bank & Trust Fraud Case
Jim Graber, 57, Senior Vice President at Rockford Bank and Trust Company
Kristin King, 45, Vice President and Government Lending Manager at Rockford Bank and Trust
In 2017 two Rockford Bank & Trust officers – James Graber and Kristin King – were charged with falsifying statements to the SBA. According to the indictment, Graber and King submitted a $3,980,000 SBA loan application on behalf of SunLee which contained false statements and disclosures. The feds claim that the application omitted a conflict of interests, understated the guarantor’s liabilities, and failed to disclose that the proceeds of the loan would be used to pay ineligible past due payroll taxes.
Lending institutions will often go above and beyond for their customers. However, it is important to still follow SBA rules and procedures in order to maintain a credible reputation. Here are some practical tips to help you avoid being associated with a fraud scheme similar to the Rockford Bank & Trust case:
1. Avoid getting involved in your superior’s fraudulent activity.
In the Rockford Bank & Trust fraud case, King became associated with fraud because of her superior. According to the indictment, James Graber, who was a senior vice president at Rockford Bank & Trust, knowingly prepared the fraudulent loan with the help of the guarantor, Ryan Cole. Although the indictment alleges that King played a more passive role in the fraud, she could face up to 30 years in prison and a fine of up to $1 million. In addition, King is now associated with bank fraud which could effectively ruin her reputation in the SBA lending industry.
2. Verify that the guarantor’s documents have not been altered or falsified.
The indictment alleges that Ryan Cole submitted personal financial statements to Rockford Bank & Trust which falsely claimed that his liabilities only totaled $578,800 when they were, in fact, much higher. Cole is also facing charges for allegedly providing a rent roll that contained false information.
3. Understand eligibility rules.
According to the indictment, the proceeds of the fraudulent loan were intended to be used to pay off past due taxes and liens. Past due taxes are considered ineligible debt and therefore an SBA loan cannot be obtained for this purpose.
Read our previous reporting:
Fraud Friday — Two Rockford Bank & Trust SBA VPs Indicted for SBA Loan Fraud
Department of Justice Indictment