stickyimage

Fraud Friday – “Working Capital” Fits better than “Past Due Payroll Taxes”

August 30, 2019

By Caity Witucki
Contributing Editor, Fraud Friday

Fraud Friday – “Working Capital” Fits better than “Past Due Payroll Taxes”

Former president, chief executive officer and founder of banc-serv, Kerri Agee (aka Kerri Agee-Smith), has been indicted for her alleged role in a 13-year-long conspiracy to defraud the Small Business Administration (SBA). Four other banc-serv employees have been named on the indictment and numerous others have been implicated in the alleged crime. According to the indictment, the banc-serv employees are assumed to have been working under the direction and supervision of Kerri Agee.

On March 19, 2009, a lending institution allegedly sought banc-serv’s assistance in obtaining a $35,000 SBA guaranteed loan. The purpose of the loan was to “provide working capital to pay past due payroll taxes.”

A banc-serv employee emailed the lending institution saying, “payroll taxes are not allowed to be paid out of the working capital proceeds.” However, she allegedly added that they could hide what the loan proceeds would be used for. She said, “we will just state ‘working capital’ since this better fits – is that OK?” The loan officer from the lending institution confirmed it was okay.

On April 3, 2009, Kerri Agee allegedly directed one of her employees to go forward with the SBA 7(a) loan application on behalf of the lending institution and their mutual client. The banc-serv employee was supposedly instructed to omit any mention of delinquent payroll taxes and not to check the box on the eligibility questionnaire indicating that the loan proceeds were going to be used to pay past due taxes.

A few days after the application was submitted, the SBA sent a letter of denial stating that the borrower had poor credit history and that the “SBA relies heavily on an applicant’s credit history to give an indication of future performance.”

Under Kerri Agee’s supervision, a banc-serv employee allegedly withdrew the loan and resubmitted it as an SBA Express loan. The SBA Express loan was accepted and closed on May 20, 2009. However, in January 2013, the borrower defaulted on their SBA guaranteed loan.

According to the indictment, a banc-serv employee, under the direction of her supervisor and Kerri Agee, signed a backdated environmental assessment so that the SBA would honor the loan guarantee.

A warrant for Agee’s arrest was executed on March 22, 2019. According to the indictment, Agee is being charged with numerous counts of wire fraud and for making false statements in loan-guarantee applications. As a result of the loan fraud scheme, several banc-serv employees have lost their jobs and have been implicated in the crime.

The case against Agee and her co-defendants is pending in the Indiana Southern District Court. Agee has not yet been convicted and is presumed innocent until proven guilty.

Sources:
The United States Department of Justice

Indictment

Read our previous reporting:

Fraud Friday — “They Got Us” CEO of banc-serv Indicted for $10 Million Loan Fraud Scheme” — August 23, 2019

Banc-Serv’s Kerri Agee, 4 others Arrested for $10 Million SBA Loan Fraud — March 22, 2019

Kerri Agee out of banc-serv — April 13, 2018

Newtek Forecasts Zero Earnings from banc-serv — November 3, 2017

Banc-Serv Retains Brent Ciurlino, Appoints Karen McHugh EVP — October 19, 2017

Uh Oh, FBI Raids Banc-serv Campus, Locks Doors — October 13, 2017

Newtek Stock Down 10%, Says FBI Executed Search Warrant on Banc-serv — October 13, 2017

3 weeks ago by in . You can follow any responses to this entry through the | RSS feed. You can leave a response, or trackback from your own site.