Phoenix Man Sentenced to Prison for Commercial Loan Fraud
|U.S. Attorney’s Office October 29, 2013|
PHOENIX—On October 28, 2013, Joseph N. Gagliano, 45, of Phoenix, was sentenced to 30 months in prison and ordered to pay $2,903,010.26 in restitution by U.S. District Court Judge G. Murray Snow.
First Assistant U.S. Attorney Elizabeth A. Strange highlighted the significance of this sentence, “These loans should have gone to qualified small business owners in need of financial support. The defendant’s fraudulent conduct denied small business owners the opportunity to obtain access to capital in a difficult economy, and the United States Attorney’s Office will continue to investigate and prosecute such borrowers who obtain SBA loans through fraud.”
“Corrupt borrowers who attempt to defraud SBA's loan programs will be aggressively pursued by our office,” said SBA Inspector General Peggy E. Gustafson. “This successful investigation and prison sentence demonstrates our commitment to insure that SBA loans are only disbursed to deserving small businesses helping to grow our economy. We appreciate the leadership of the U.S. Attorney's Office and the support of the FBI to bring this indictment forward.”
The case against Gagliano was based on an investigation by the SBA-OIG and FBI. Between June 2006 and July 2010, Gagliano sought a SBA loan for a car wash located in Chandler and mortgage loans for residential real estate located in Scottsdale and Phoenix. He submitted loan applications that falsely misrepresented that his father, who has the same name, was the actual borrower and also made misrepresentations concerning his income, assets, liabilities, and intent to occupy the residential properties as a primary residence. Gagliano also forged signatures, altered bank statements, and submitted bogus lease agreements. The scheme to defraud resulted in nearly $3 million in losses to the Small Business Administration, Wells Fargo Bank, and JP Morgan Chase.
The investigation in this case was conducted by the Small Business Administration-Office of Inspector General and the Federal Bureau of Investigation. The prosecution was handled by Kevin M. Rapp Assistant U.S. Attorney, District of Arizona, Phoenix.