Gaithersburg Man Pleads Guilty in Bank Fraud Scheme
BALTIMORE, MD—Phong Dinh Tran, age 40, of Gaithersburg, Maryland, pleaded guilty today to conspiring to commit bank fraud arising from a scheme to use a straw purchaser to buy a liquor store.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Small Business Administration Inspector General Peggy E. Gustafson; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; and Postal Inspector in Charge Gary R. Barksdale of the U.S. Postal Inspection Service—Washington Division.
According to his plea agreement, Tran created R&K Real Estate Investment, Inc. to buy Potomac Wine & Spirits, a liquor store in Hagerstown, Maryland. Tran was the majority and controlling owner of R& K, and K.P. had a minority ownership interest. In May 2006 Tran and K.P. signed agreements to buy the liquor store for $899,000 and the real estate that the store occupied for $400,000.
Tran sought Joon Park, a principal of Jade Capital & Investments, to broker a loan for the store’s purchase. Tran and Park discussed obtaining a loan at PNC Bank that was guaranteed by the U.S. Small Business Administration (SBA). Because Tran had significant debt from the purchase of residential properties, Park advised that Tran would not likely be approved for an SBA guaranteed loan.
Tran disclosed to Park that he could use a straw buyer, T.C.P., for the loan. Tran and Park agreed that they would falsely represent to PNC that T.C.P. would be the owner and operator of the liquor store. Tran asked the straw buyer to apply for the loan and promised that he, Tran, would pay all the bills for the store and make the loan payments. The settlement for the sale of the liquor store to R&K occurred on September 29, 2006. The straw purchaser falsely represented to PNC that he was the president of R&K. The funds needed to close the transaction were provided by Tran, not the straw purchaser. PNC funded a loan of $950,000.
After the closing, Tran ran the liquor store. On January 22, 2007 Tran sold a 50% stake in the store to another individual for $380,000. During the sale, Tran represented to the individual that he owned 100% of the store. In 2007, Tran stopped making loan payments to PNC and the loan went into default.
Tran faces a maximum sentence of 30 years in prison and a $1 million fine. U.S. District Judge William D. Quarles, Jr. scheduled his sentencing for December 18, 2014, at 1:00 p.m.
In a separate case, Joon Park, a/k/a “Joon Pak,” and “Joon Paik,” age 44, of Falls Church, Virginia, previously pleaded guilty to his role in a bank fraud conspiracy arising from a scheme to fraudulently obtain numerous business loans guaranteed by the SBA, with resulting losses of over $100 million. Park submitted false SBA loan applications on behalf of his clients from 2003 to 2011. Judge Quarles sentenced Park on June 20, 2013 to 15 years in prison and ordered Park to pay a money judgment of $91,449,700.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
United States Attorney Rod J. Rosenstein commended the SBA-OIG, FBI and U.S. Postal Inspection Service for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorneys Leo J. Wise and Sean Delaney, who are prosecuting the case.