Owner of International Clothing Retailer Arrested on Bank Fraud Charges
Defendant Allegedly Defrauded Israeli Bank of Approximately $5.8 Million
Earlier today, Kwong Hung Lam, also know as “Eric Lam,” the president and sole owner of New Century Enterprise Inc. (“New Century”), an importer and distributor of casual apparel headquartered in Farmingdale, New York, was arrested on bank fraud charges.1 The defendant’s initial appearance is scheduled later today before United States Magistrate Judge Robert M. Levy at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Special Agent-in-Charge of the Federal Bureau of Investigation, New York Field Office.
According to the complaint, in December 2006, the defendant, on behalf of New Century, entered into a written credit line loan agreement with Bank Leumi USA (“Bank Leumi”), pursuant to which Bank Leumi agreed to extend funds and other financial accommodations, such as letters of credit, to New Century on a discretionary basis. By September 2009, the defendant, who had personally guaranteed the loan, and New Century owed Bank Leumi approximately $5.8 million. In September 2009, the defendant represented to Bank Leumi that the value of the collateral for the loan, New Century’s inventory and accounts receivable, was approximately $9 million.
In October 2009, the defendant terminated New Century’s business operations, and thereafter authorized Bank Leumi to take possession of all New Century’s inventory and accounts receivable. Upon inspection of the collateral for the loan, however, Bank Leumi discovered that New Century’s inventory and accounts receivable were worth far less than the defendant had represented in September 2009. As alleged in the complaint, the inventory was valued at less than $100,000, and the accounts receivable balance was falsified and therefore uncollectible.
“Protecting banking institutions from fraudulent schemes is a priority of this Office and the Department of Justice, “ stated United States Attorney Lynch. “Those who engage in such conduct will be aggressively investigated and prosecuted.”
FBI Special Agent-in-Charge Venizelos stated, “The complaint alleges bank fraud, but in simple terms the defendant allegedly lied in grossly overstating the value of collateral for a multimillion-dollar loan. This brazen form of theft will be vigorously policed by the FBI.”
If convicted of bank fraud, the defendant faces a maximum sentence of 30 years’ imprisonment.
The government’s case is being prosecuted by Assistant United States Attorney James G. McGovern.
This case was brought in coordination with 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.
Name: KWONG HUNG LAM
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