Judge Sentences Former Loan Broker for Kwik Industries to 36 months in Federal Prison and Orders Her to Pay Approximately $8.5 Million in Restitution
Kwik Industries Created, Built, Sold and Managed Kwik Kar Lube and Tune; Kwik Wash; and Kwik Dry Clean Super Centers
DALLAS — Janice L. Stallons, of Fort Worth, a former loan broker for Kwik Industries in Dallas, was sentenced this morning by U.S. District Judge Barbara M. G. Lynn to 36 months in federal prison and ordered to pay $8,581,970 in restitution after pleading guilty in August 2011 to one count of conspiracy to commit bank fraud. She was ordered to surrender to the Bureau of Prisons no later than May 1, 2012. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
According to documents filed in the case, as a loan broker for Kwik Industries, Stallons, 57, provided services to buyers of Kwik-related businesses applying for a commercial loan. Stallons worked directly with the borrowers to secure funding for their business by assisting them in preparing their loan applications and providing the completed loan packages to banks who were willing to fund the U.S. Small Business Administration (SBA) loans.
SBA requires that their guaranteed loans must be supported by a “cash injection” or down payment of funds (20 percent in most cases) to be paid at or before the time of the note’s closing. Because of the volume of loans that they were referring, Kwik Industries negotiated an agreement with the SBA that allowed buyers to instead pay a 10 percent cash injection if they also signed a secondary note with Kwik Industries that allowed Kwik to provide the required additional 10 percent.
From June 2002 through August 2004, Stallons conspired to defraud the U.S. by making materially false and fraudulent statements to the SBA which led the SBA to guarantee loans to buyers of Kwik-related businesses who did not qualify for the loans under SBA regulations. For example, Stallons mis-represented to Compass Bank that borrowers had fully funded a cash injection when in fact they had not, or had backed a cash injection of a lesser amount.
The case was investigated by the FBI and the SBA-Office of Inspector General.
Assistant U.S. Attorney Jason D. Schall was in charge of the prosecution.
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