Loan Broker Pleads Guilty in Conspiracy to Fraudulently Obtain More Than $100 Million in Small Business Administration-Backed Loans
SBA Loan Underwriters Relied on False Representations by Borrowers and Brokers
|U.S. Attorney’s Office March 19, 2013|
BALTIMORE—Joon Park, a/k/a “Joon Pak,” and “Joon Paik,” age 43, of Falls Church, Virginia, pleaded guilty today to conspiracy to commit bank fraud in connection with a scheme to fraudulently obtain business loans guaranteed by the Small Business Administration, with resulting losses of over $100 million. Joon Park and others were charged in a second superseding indictment that was returned by a federal grand jury on March 7, 2013.
The guilty plea and indictment were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Small Business Administration Inspector General Peggy E. Gustafson; Postal Inspector in Charge Gary R. Barksdale of the U.S. Postal Inspection Service—Washington Division; and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.
“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 as if the borrowers had invested money in the businesses,” said U.S. Attorney Rod J. Rosenstein. “When borrowers and brokers submit false information and fraudulent documents, the underwriting process is defeated and the taxpayers bear the loss.”
“The scope of this audacious scheme to fraudulently secure SBA-backed loans is outrageous,” said Inspector General Peggy E. Gustafson. “The SBA OIG will relentlessly pursue individuals who falsify documents to obtain approval for loans designed to help hard-working Americans realize their dreams of opening a business or expanding their operations. The SBA OIG appreciates the leadership of the U.S. Attorney’s Office and its partnership with the FBI in bringing forth this plea agreement.”
According to his plea agreement, Joon Park and his brother, Loren Park, owned and operated Jade Capital, a loan brokerage company specializing in securing loans for individuals interested in purchasing or refinancing small businesses in the Mid-Atlantic area. According to the indictment, Joon and Loren Park and others under their direction encouraged prospective borrowers using the services of Jade Capital to apply for business loans through the SBA’s Section 7(a) program, which guaranteed 75-90 percent of qualified loans made by banks and other commercial lending institutions. Under this program, the principals of the small business seeking the loan were required to invest a certain amount of their own money, called an equity injection, before they qualified for a loan. The banks and other lending institutions making the loan 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, including Nick Park (no relation), Joo Hyuk “John” Lee, Sang Hyun Kim, and In Jung Ham, submitted SBA loan applications and supporting documentation to loan originators and underwriters on behalf of their clients that contained fraudulent documents, including: bank statements for borrowers that were altered to make it look like the borrowers had more cash to inject into the business they were buying than they in fact did; counterfeit cashier’s checks and fake gift letters that made it look like the borrowers had more assets at their disposal to use as down payments than they did; fabricated resumes that made it look like the borrowers had more experience running the businesses they sought to purchase than they did; fake tax returns that made it look like the borrowers had greater income than they did; phony interim financial statements that made other businesses the borrowers owned look more profitable than they were; and a number of other misrepresentations.
The Parks charged a loan brokerage fee to both the financial institutions and the borrowers for assembling and submitting loan application packages that resulted in the issuance of SBA-guaranteed loans. The fees charged to borrowers were hidden from the financial institutions underwriting the loans. The Parks also had undisclosed ownership interests in businesses involved in some of the transactions and received loan proceeds, unbeknownst to the lenders, in a number of transactions. In one instance, the Parks did not have an ownership interest in a company involved in a transaction but persuaded the seller to assign some of the loan proceeds to them and then converted those proceeds to their own personal use.
According to his plea agreement, Joon Park also worked with a settlement attorney to facilitate loan closings for deals that would otherwise fail to meet the lending parameters of the banks making the loans by misrepresenting to the banks and to the SBA the true amount of money involved in the transactions and/or the true names of the parties taking part in the transactions. In addition to conducting fraudulent closings, this settlement attorney wired money to Jade Capital clients to make it appear as though they qualified for loans, when they did not, and received, at Joon Park’s direction, loan proceeds to repay those loans.
Joon Park faces a maximum penalty of 30 years in prison. As part of his plea agreement, Joon Park will be required to pay a money judgment of $91,449,700 and forfeit all the property involved in the offense. U.S. District Judge William D. Quarles, Jr. has scheduled sentencing for May 28, 2013, at 1:00 p.m.
Nick Park, a/k/a Nochol Park, age 46, of McLean, Virginia, was sentenced to 33 months in prison; and Joo Hyuk “John” Lee, age 39, of Richmond, Virginia, and Sang Hyun Kim, age 35, of Fairfax, Virginia, were each sentenced to three years in prison for conspiracy to commit bank fraud. Kim’s wife, In Jung Ham, age 30, also of Fairfax, was sentenced to a year and a day in prison for her role in the scheme. Judge Quarles ordered Lee to pay restitution of $1,900,325 and ordered Ham to pay restitution of $216,472.92. Lee, Kim, and Ham were also ordered to forfeit the proceeds of the scheme and pay money judgments of $18,764,900, $13,432,000, and $15,725,000, respectively.
In addition to Joon Park, Loren Young Parkm and Jade Capital & Investments, who were charged previously, the second superseding indictment included two new defendants, Seung E. Oh, a/k/a Sandy Oh, age 44, of Great Falls, Virginia; and Seung Hyun Shin, a/k/a/ Phillip Shin, age 39, of Villanova, Pennsylvania. Oh is an attorney with offices in Annandale, Virginia, and the owner operator of Washington Settlement Group, a title company located in Annandale. From 2004 through 2008, Shin was the owner and operator of Cosmopolitan Title and Settlements LLC, a title company located in Rockville, Maryland. The indictment alleges that the defendants engaged in a conspiracy to commit bank fraud, bank fraud, and money laundering, resulting in losses of more than $102 million.
The defendants face a maximum sentence of 30 years in prison for the bank fraud conspiracy and for each count of bank fraud; and 20 years in prison for each count of money laundering. Seung Hyun Shin had his initial appearance on March 18, 2013, and Seung E. Oh is scheduled to have her initial appearance on April 5, 2013, in U.S. District Court in Baltimore. Loren Park is believed to be in Korea.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
These law enforcement actions are part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
United States Attorney Rod J. Rosenstein thanked the SBA Office of Inspector General, U.S. Postal Inspection Service, and FBI for their work in the investigation. Mr. Rosenstein praised Assistant U.S. Attorneys Leo J. Wise and Martin J. Clarke, who are prosecuting the case.