Former Officers and Employees of Indiana Loan Packager and Servicer Charged in Alleged $10 Million Scheme to Defraud the Small Business Administration
Five former officers and employees of an Indiana loan packaging and servicing company were charged for their alleged roles in a 13-year-long conspiracy to defraud the Small Business Administration (SBA) in connection with its programs to guarantee loans made to small businesses.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Josh Minkler of the Southern District of Indiana, Inspector General Hannibal “Mike” Ware of the SBA Office of Inspector General (SBA-OIG), Inspector General Jay Lerner of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) and Special Agent in Charge Grant Mendenhall of the FBI Indianapolis Field Office made the announcement.
Kerri Agee, aka Kerri Agee-Smith, 43, of Noblesville, Indiana, former president, chief executive officer and founder of Banc-Serv Partners LLP (Banc-Serv); Kelly Isley, 38, of Westfield, Indiana, Banc-Serv’s former chief operating officer; Matthew Smith, 50, of Westfield, Indiana, Banc-Serv’s co-founder; Chad Griffin, 46, of Carmel, Indiana, Banc-Serv’s former chief marketing officer; and Nicole Smith, aka Nicole Smith-Kelso, 42, of Indianapolis, Indiana, a former Banc-Serv employee, were charged in an indictment unsealed today with one count of conspiracy to commit wire fraud affecting a financial institution and one count of conspiracy to make false statements in loan-guarantee applications and purchase requests. Additionally, Agee was charged with four counts of wire fraud and seven counts of making false statements in loan-guarantee applications and purchase requests; Isley was charged with three counts of wire fraud and four counts of making false statements in loan-guarantee applications and purchase requests; Griffin was charged with one count of making false statements in loan-guarantee applications and purchase requests; and Nicole Smith was charged with three counts of wire fraud and four counts of making false statements in loan-guarantee applications and purchase requests.
According to the indictment, from approximately 2004 until October 2017, the defendants helped originate SBA loans on behalf of various financial institutions. On multiple occasions, the defendants fraudulently obtained guarantees for loans that the SBA deemed ineligible, the indictment alleges. The indictment also alleges that the defendants hid signs of ineligibility from the SBA by knowingly misrepresenting the use of SBA loan proceeds and unlawfully diverting previously denied loan applications into expedited approval channels. Matthew Smith left Banc-Serv in or around the end of 2005, and he founded and became the managing director of a non-bank lending company. According to the indictment, Smith knowingly caused false and fraudulent loan applications that were prepared by Banc-Serv employees and guarantee requests to be transmitted to the SBA.
The indictment further alleges that when a fraudulently guaranteed loan defaulted, the defendants caused other Banc-Serv employees to transmit requests to the SBA to purchase the defaulted loans from investors and lending institutions, thereby shifting losses on the ineligible loans to the SBA.
The indictment alleges that the defendants and their co-conspirators originated dozens of loans, totaling over $10 million in disbursements, which were not eligible for SBA guarantees.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The SBA-OIG, the FDIC-OIG and the FBI investigated the case. This case is being prosecuted by Trial Attorneys William Johnston and Vasanth Sridharan of the Criminal Division’s Fraud Section. The Department of Housing and Urban Development Office of Inspector General also assisted in the investigation.