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Guilty plea in $100M loan fraud

By Marcie Geffner · Bankrate.com
Sunday, April 14, 2013
Posted: 5 am ET

A loan broker in Falls Church, Va., has pleaded guilty to conspiracy to commit bank fraud in connection with a $100 million scheme to obtain business loans guaranteed by the Small Business Administration, or SBA. That federal agency backs small-business loans made by banks.

Joon Park, 43, and others were charged in an indictment returned by a federal grand jury March 7, according to a statement released by the Financial Fraud Enforcement Task Force, a coalition of federal, state and local law enforcement agencies that investigates and prosecutes financial crimes.

Rod J. Rosenstein, U.S. attorney for the District of Maryland, Peggy E. Gustafson, SBA inspector general, Gary R. Barksdale, postal inspector in charge at the U.S. Postal Inspection Service-Washington Division, and Stephen E. Vogt, special agent in charge at the Federal Bureau of Investigation, announced the indictment and guilty plea.

In a statement, Rosenstein explained that SBA underwriters approved $100 million in business loans brokered by Jade Capital, a loan brokerage company owned and operated by Park and his brother Loren Park and supposedly specializing in securing loans for individuals who wanted to purchase or refinance small businesses in the Mid-Atlantic area. The approvals were based on fraudulent documents that made it appear as if the borrowers had invested money in the businesses.

"When borrowers and brokers submit false information and fraudulent documents, the underwriting process is defeated and the taxpayers bear the loss," Rosenstein said.

According to the indictment, the Park brothers and others under their direction encouraged prospective borrowers to apply for loans through an SBA program that guaranteed 75 percent to 90 percent of qualified loans made by banks and other commercial lenders. The program required principals of small businesses seeking loans to invest a certain amount of their own money before they qualified for a loan. The banks and other lending institutions bore the risk of payment default only up to the percentage of the loan not guaranteed by the SBA.

Joon Park admitted that from 2003 until October 2011, he and others under his direction submitted SBA loan applications on behalf of their clients with fraudulent documents that included altered bank statements, counterfeit cashier’s checks, fake gift letters, fabricated resumes, fake tax returns and phony interim financial statements.

The Parks then charged the financial institutions and borrowers loan brokerage fees for assembling and submitting the loan application packages. The fees charged to the borrowers were hidden from the financial institutions. The Parks also had undisclosed ownership interests in some of the businesses and, unbeknownst to the lenders, received loan proceeds in a number of transactions.

Joon Park faces a maximum penalty of 30 years in prison. As part of his plea agreement, he will be required to pay a monetary judgment of approximately $91.5 million and forfeit all the property involved in the crimes. Sentencing is scheduled for May 28 at 1 p.m.

Others involved in the scheme included Nick Park (no relation), Joo Hyuk "John" Lee, Sang Hyun Kim and Kim's wife In Jung Ham.

Park, 46, of McLean, Va., was sentenced to 33 months in prison. Lee, 39, of Richmond, Va., and Kim, 35, of Fairfax, Va., were each sentenced to three years in prison. Ham, 30, also of Fairfax, was sentenced to one year and one day in prison. Lee was also ordered to pay restitution of $1.9 million. Ham was ordered to pay restitution of $216,472. Lee, Kim and Ham were ordered to forfeit their proceeds from the scheme and pay monetary judgments of approximately $18.7 million, $13.4 million and $15.7 million, respectively.

Follow me on Twitter: @marciegeff.

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3 Comments
Porfirio Scinto
May 13, 2013 at 3:07 pm

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Dennis Bryant
April 16, 2013 at 2:54 am

Chase Bank did over half of the list to me during my so called mod loan. So my question is do they pay you for all of the things they did wrong , Or just the lowest paying one. They also sold my loan to Oquin just at the end of setting up my loan mod. I also did the trial mod for 3 months , ON TIME. at the end of the 3 months they said I was late on a payment. I made the payment in a branch in Cournileus Or. at about noon, on the 31 of the month. by the time they posted the payment was a day late. They are CROOKS and need to take care of the ones who are paying all the employees pay checks . as well as the C.E.O. LOCK THEM UP IN JAIL.

manoj
April 15, 2013 at 7:26 am

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