TAYLOR MAN SENTENCED ON LOAN SCHEME
Robert Guthrie, 42, of Taylor, Michigan was sentenced today to twelve months in prison for his participation in an $84 million dollar Small Business Administration (SBA) loan scheme announced United States Attorney Barbara L. McQuade. McQuade was joined in the announcement by Special Agent-in-Charge Jeffrey Frost, United States Secret Service and SBA-OIG Special Agent in Charge Keith Hohimer.
United States District Judge Patrick J. Duggan also sentenced Guthrie to 3 years supervised released and ordered him to pay approximately $5.9 million in restitution.
Guthrie pleaded guilty on October 6, 2009. According to the plea documents, between 2000 and 2005, the defendant who was employed at MidWest Title, admitted to falsely representing the financial qualifications of the borrowers and their citizenship status. Guthrie also admitted to falsely stating that the borrowers had sufficient equity to receive such loans.
The now-defunct Business Loans Express (BLX) originated, sold, and serviced the loans under the SBA’s guaranteed loan program. BLX was one of the country’s largest SBA lenders. In 2009, Ciena Capitol, which acquired BLX agreed to pay $26.3 million to resolve a false claims action against BLX.
Patrick Harrington, who was an Executive Vice-President of BLX and headed the Troy, Michigan, branch of BLX pleaded guilty for his role in the fraud scheme which included falsifying loan documents, inflating appraisal values, and using straw purchasers to engage in sham transactions. Harrington was sentenced to 120 months in prison and ordered to pay $33 million in restitution.
"Fraudulent schemes such as this have evolved significantly over the last several years," said Jeff Frost, Special Agent in Charge of the U.S. Secret Service Detroit Field Office. "Cooperation between law enforcement has allowed us to focus our resources and respond quickly to uncover criminal activity such as this type of financial fraud."
SBA-OIG Special Agent in Charge Keith Hohimer stated, "Many small businesses rely on the SBA to obtain financing through lending institutions. This investigation identified the worst case scenario. When the lender and title company are corrupt there are no checks and balances opening the door for fraud and abuse. The integrity of the SBA loan guarantee process was compromised."
The case was prosecuted by Assistant United States Attorney Philip A. Ross. The case was investigated by the United States Secret Service and the United States Department of Small Business-Office of Inspector General.