Loan Broker Admits to $100 Million Small-Business Fraud

A Virginia-based loan broker pleaded guilty in Baltimore federal court to using falsified documents to win $100 million in bank loans backed by the U.S. Small Business Administration, prosecutors said.

Joon Park, 43, entered his plea to conspiracy to commit bank fraud today and faces as long as 30 years in prison and a money judgment of more than $91 million when he’s sentenced on May 28, according to an agreement with the U.S. Attorney’s Office in Baltimore.

Park’s brokerage, Jade Capital & Investments LLC, of Woodbridge, Virginia, used phony documents to persuade SBA officials to approve loans under the agency’s Section 7(a) program, which requires small business owners to invest specified amounts of their own money, according to U.S. Attorney Rod Rosenstein.

“SBA underwriters approved $100 million in business loans brokered by Jade Capital based on fraudulent bank statements, checks, gift letters, resumes and tax returns that made it appear that borrowers had invested money in the businesses,” Rosenstein said in an e-mailed statement.

Park admitted that from 1998 until October 2011, he and other conspirators, including his brother, Loren Park, submitted SBA loan applications and supporting documentation to loan originators and underwriters on behalf of clients that contained falsified documents, such as bank statements altered to make it look like applicants had more cash to inject into a business than they actually did.

Commercial Lenders

Joon Park arranged for 124 fraudulent loans with 17 commercial lenders ranging in size from $100,000 to $14.5 million, according to a superseding indictment returned by a federal grand jury on March 7.

Lenders included units of large bank holding companies including M&T Bank Corp. (MTB), of Buffalo, New York and PNC Financial Services Group, of Pittsburgh, as well as local or regional lenders such as Chesapeake Bank, of Kilmarnock, Virginia, and the Sandy Spring Bank unit of Sandy Spring Bancorp Inc. (SASR) of Olney, Maryland, according to the indictment.

Taxpayers, through the SBA, guaranteed 75 to 90 percent of each loan, leaving the lenders on the hook for the rest, according to a statement from Rosenstein’s office.

Falsified Information

In some cases, Joon Park and Loren Park, had undisclosed ownership interests in businesses receiving loan proceeds. In other cases, loan applicants were unaware that their financial or personal information was being falsified, Marcia Murphy, a spokeswoman for Rosenstein, said in an e-mail.

Loren Park, who also is charged in the case, is believed to be in Korea.

Earlier, Nick Park, 46, of McLean, Virginia, no relation to the Park brothers, was sentenced to 33 months in prison and Joo Hyuk “John” Lee, 39, of Richmond, Virginia and Sang Hyun Kim, 35, of Fairfax, Virginia, were both sentenced to three years in prison for conspiracy to commit bank fraud.

Kim’s wife, In Jung Ham, 30, of Fairfax, was sentenced to a year and a day in prison.

Two new defendants named in the superseding indictment, Seung E. Oh, 44, of Great Falls, Virginia, and Seung Hyun Shin, 39, of Villanova, Pennsylvania, are accused of conspiracy to commit bank fraud and other charges.

The case is U.S. v. Park, 11-cr-00600, U.S. District Court, District of Maryland (Baltimore).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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