Loan Broker Sentenced to More Than 15 Years in Prison in Conspiracy to Fraudulently Obtain More Than $100 Million in SBA-Backed Loans
SBA Loan Underwriters Relied on False Representations by Borrowers and Brokers
|U.S. Attorney’s Office June 20, 2013|
BALTIMORE—U.S. District Judge William D. Quarles, Jr. sentenced Joon Park, a/k/a “Joon Pak” and “Joon Paik,” age 43, of Falls Church, Virginia, today to 188 months in prison, followed by five years of supervised release, for conspiring to commit bank fraud in connection with a scheme to fraudulently obtain business loans guaranteed by the Small Business Administration, with resulting losses of more than $100 million. Judge Quarles also ordered Park to pay a money judgment of $91,449,700 and forfeit all the property involved in the offense.
The sentence was 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.”
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 to apply for business loans through an SBA program that guaranteed 75 to 90 percent of qualified loans made by banks and other commercial lending institutions. Under the program, the principals of the small business seeking the loan were required to invest a certain amount of their own money before they qualified for a loan. The banks and other lenders 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.
Joon Park also worked with settlement attorney Seung E. Oh, 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, Oh 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.
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. 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. Seung E. Oh, a/k/a Sandy Oh, age 44, of Great Falls, Virginia, pleaded guilty to conspiracy to commit bank fraud and money laundering and is scheduled for sentencing on July 9, 2013, at 1:00 p.m.
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 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 prosecuted the case.