Loan Brokerage Company, Its Owners, and an Associate Indicted for Alleged $37 Million Bank Fraud Conspiracy

BALTIMORE—A federal grand jury has indicted Jade Capital & Investments, LLC, and its owners, brothers Joon Park, a/k/a “Joon Pak,” and “Joon Paik,” age 41, of Falls Church, Virginia, and Loren Young Park, a/k/a “Loren Yong Park,” and “Yong Park,” age 44, of Vienna, Virginia, on charges connected to a scheme to fraudulently obtain business loans guaranteed by the Small Business Administration, with resulting losses alleged to be over $37 million. Nick Park, a/k/a Nochol Park, age 46, of McLean, Virginia, an associate of Joon and Loren Park, but no relation, was also charged in the scheme. The indictment was returned on November 8, 2012 and unsealed today.

The indictment was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Small Business Administration Inspector General Peggy E. Gustafson.

“This fraud scheme created untenable risks for the Small Business Administration’s (SBA) guaranteed loan programs and effectively denied opportunities for small businesses deserving access to capital to finance and grow their businesses,” said Small Business Administration Inspector General Peggy E. Gustafson. “The SBA Office of Inspector General will continue to aggressively investigate and seek criminal prosecution or civil remedies when fraud is perpetrated by corrupt borrowers or loan brokers as they attempt to obtain financial assistance through SBA’s guaranteed loan programs. We would like to thank the U.S. Attorney’s Office for its dedicated leadership and professionalism throughout this investigation.”

According to the nine count indictment, Jade Capital was a loan brokerage company operated by Joon and Loren Park and specializing in securing loans for individuals interested in purchasing or refinancing small businesses in the Mid-Atlantic area. According to the indictment, Joon, Loren and Nick Park 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 percent - 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.

The indictment alleges that from February 2005 until October 2011, Joon, Loren, and Nick Park submitted SBA loan applications and supporting documentation to loan originators and underwriters on behalf of their clients. The indictment alleges that the packages contained fraudulent personal financial statements and/or monthly bank statements which overstated the net worth and equity injection of the borrowers and falsely enhanced the creditworthiness of the borrowers and their businesses.

The indictment alleges that Joon and Loren Park altered copies of the borrowers’ monthly bank statements to fraudulently reflect more money than was actually in the accounts; created false bank statements for accounts that did not exist; and provided some of the financial institutions with misleading summaries of the borrowers’ business experience in order to falsely enhance the borrowers’ ability to manage the business and make the required loan payment.

The indictment further alleges that Joon, Loren and Nick Park and Jade Capital supplied some financial institutions with fraudulent gift letters falsely representing the source of the borrowers’ down payments and equity injections. Also according to the indictment, Joon Park, Loren Park and Jade Capital submitted financial documentation to lenders that misrepresented the equity injection of the principal owners of 51 businesses that had applied for SBA-guaranteed loans. In addition, the defendants 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 indictment alleges that Joon Park submitted fraudulent documentation, including a personal financial statement and monthly bank statements in connection with an SBA loan application for a car wash business in which he was the principal owner.

Finally, the indictment seeks forfeiture of $37,852,390, all interest in Jade Capital, the car wash business owned by Joon Park, and other bank accounts and property derived from or constituting the proceeds of the scheme.

The defendants face a maximum sentence of 30 years in prison for the bank fraud conspiracy and for each count of bank fraud. Joon Park and Nick Park had initial appearances today in U.S. District Court in Baltimore and were detained. A detention hearing is scheduled for Joon and Nick Park on Friday, November 18th at 10:30 a.m. Loren Park is being sought.

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.

This law enforcement action is 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 FBI and SBA Office of Inspector General for their work in the investigation. Mr. Rosenstein praised Assistant U.S. Attorneys Martin J. Clarke and Leo J. Wise, who are prosecuting the case.