Loan Brokers Plead Guilty to a Bank Fraud Conspiracy with Losses to the SBA of More than $13 Million
Baltimore, Maryland - Two loan brokers, Joo Hyuk “John” Lee, age 39, of Richmond, Virginia; and Sang Hyun Kim, age 35, of Fairfax, Virginia, pleaded guilty today to conspiracy to commit bank fraud, in connection with a scheme to fraudulently obtain business loans guaranteed by the Small Business Administration (SBA), with resulting losses of more than $13 million. Kim’s wife, In Jung Ham, age 30, also of Fairfax, pleaded guilty today to the same charge for her role in the scheme.
The guilty pleas were 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.
According to their plea agreements, Joo Hyuk “John” Lee and Sang Hyun Kim worked for brothers Joon and Loren Park, owners of Jade Capital & Investments, LLC, located in Woodbridge, Virginia. Jade Capital specialized in securing loans for individuals interested in purchasing or refinancing small businesses in the Mid-Atlantic area. Lee and Kim assisted borrowers in applying for and receiving business loans through an SBA program which guaranteed loans made by banks and other commercial lending institutions. The SBA’s program required the principals of the small business seeking the loan to invest a certain amount of their own money, called an equity injection, to qualify 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.
At various times between 2005 and 2011, Kim and Lee submitted fraudulent bank statements as evidence of equity injections in numerous transactions. Specifically, Kim and Ham altered bank statements to make it appear as though the prospective borrowers had more money in their accounts than they actually did. For example, Kim brought paper copies of bank statements that had been manually altered by Joon Park or Loren Park, and electronic copies of those same bank statements to In Jung Ham, on “thumb drives” and other electronic media. Ham then altered the electronic versions of the statements, consistent with the directions given by Joon Park. Kim then provided the electronic copies of the altered statements to Joon Park at the Jade Capital offices. Also, at Joon Park’s direction, Lee told In Jung Ham to prepare a fraudulent cashier’s check as further evidence of equity and Lee submitted that check to the bank considering the loan.
Lee created other fraudulent documents for Jade Capital clients, including tax returns and financial statements, which inflated business income and growth in sales, or reduced business expenses, in order to cause the businesses to appear financially healthier than they actually were and increase the likelihood that a loan would be approved.
Kim also prepared fake pay stubs that purported to show that his wife worked at a restaurant that was owned by Joon Park and various members of his family at different times. Kim prepared the pay stubs to submit to U.S. Citizenship and Immigration Services to support his wife’s claim that she worked at the restaurant, as part of her application for a green card.
As part of their plea agreements, Lee, Kim and Ham must forfeit the proceeds of the scheme and will be required to pay money judgments of $18,764,900, $13,432,000 and $15,725,000, respectively.
The defendants face a maximum sentence of 30 years in prison for the bank fraud conspiracy. U.S. District Judge William D. Quarles, Jr. scheduled the sentencing for Ham, Lee and Kim for November 28, 2012, December 5, 2012 and December 6, 2012, respectively, all at 1:00 p.m.
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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
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 Leo J. Wise and Martin J. Clarke, who are prosecuting the case.