PIZZA SHOP OPERATOR SENTENCED TO THREE YEARS IN PRISON FOR DEFRAUDING SMALL BUSINESS ADMINISTRATION
LOS ANGELES – An Orange County man who owned several pizza parlors and related businesses was sentenced today to 36 months in federal prison for fraudulently obtaining more than $1.1 million in loans that were guaranteed by the Small Business Administration.
James Kim, 56, of La Palma, was sentenced this morning by United States District Judge Stephen V. Wilson. In addition to the prison term, Judge Wilson ordered Kim to pay nearly $2.4 million in restitution, which includes nearly $800,000 to the SBA for the fraudulently obtained loans, as well as more than $1.3 million he failed to pay other victim companies that leased him restaurant equipment and real estate.
Kim pleaded guilty in January to one count of making false statements on a loan application, admitting that he made false statements to obtain three loans from Nara Bank in 2007. Those three loans – for $300,000, $488,000 and $250,000 – were guaranteed by the SBA. On the three loan applications, Kim falsely reported that neither he nor his businesses were involved in any pending lawsuits and had no business indebtedness. However, before and during the SBA loan application process, Kim knew he had been named in two civil lawsuits that ultimately resulted in judgments against him and he knew that he had millions of dollars in indebtedness.
In a plea agreement filed in this case, Kim also acknowledged that he submitted false tax returns when applying for leases on other businesses in 2006.
“[Kim’s] behavior amounts to a shell game he played for years, obtaining financing by misstatements and omissions, and then shuffling that financing around through a variety of lenders and projects to obscure that most were skirting default and rarely as financially stable as he made them out to be,” prosecutors wrote in court papers that added: “he forced his lenders to run after him when he failed to make payments and reneged on his obligations, while he was already off applying for the next loan.”
Peggy E. Gustafson, Inspector General for the SBA, said: “This successful prosecution demonstrates our determination to aggressively investigate fraud in SBA’s lending programs. Preventing and detecting fraud ensures legitimate borrowers receive the necessary capital to grow their businesses.”
Nara Bank referred the matter to the Office of Inspector General for the SBA, which conducted the criminal investigation.
Release No. 11-061
Mortgage Settlement Information
Individuals who believe that they may have been victims of lending discrimination by Countrywide and have questions about the settlement may email the Department of Justice at email@example.com .