Baltimore, Maryland – U.S. District Judge Catherine C. Blake today sentenced Loren Young Park, age 52, formerly of Falls Church, Virginia, to nine years in federal prison, followed by four years of supervised release, for 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 $100 million. Loren Park was a fugitive for eight years and was extradited from South Korea to face these charges.
The sentence was announced by United States Attorney for the District of Maryland Robert K. Hur; Small Business Administration Inspector General Hannibal “Mike” Ware; Postal Inspector in Charge Peter R. Rendina of the U.S. Postal Inspection Service - Washington Division; and Acting Special Agent in Charge Jennifer L. Moore of the Federal Bureau of Investigation.
“Our financial system is based on trust,” said U.S. Attorney Robert K. Hur. “Loren Park and his co-conspirators lied during every aspect of the loan process, cheating taxpayers and lenders, causing more than $100 million in losses, and hurting the chances of future small business owners to obtain loans. I am grateful for the patience and diligence of our law enforcement partners to get Loren Park back from South Korea and bring him to justice.”
According to his plea agreement and other court documents, Loren Park and his brother, Joon Park, owned and operated Jade Capital. Jade Capital brokered small business loans, among other services, for clients and on behalf of Loren Park, Joon Park, and their family. According to the plea agreement, Loren and Joon Park and others under their direction encouraged prospective borrowers using the services of Jade Capital to apply for business loans through the SBA’s Section 7(a) program, which guaranteed 75% to 90% of qualified loans made by banks and other commercial lending institutions. Under this program, the principals of the small business seeking the loan were required to invest a certain amount of their own money, called an equity injection, before they qualified 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.
Loren Park admitted that from 2003 until October 2011, he and others under his direction, including Nick Park (no relation), Joo Hyuk “John” Lee, Sang Hyun Kim, and In Jung Ham, submitted SBA loan applications and supporting documentation to loan originators and underwriters on behalf of their clients that contained fraudulent documents, including: bank statements for borrowers that were altered to make it look like the borrowers had more cash to inject into the business they were buying than they in fact did; counterfeit cashiers’ checks and fake gift letters that made it look like the borrowers had more assets at their disposal to use as down payments than they did; fabricated resumes that made it look like the borrowers had more experience running the businesses they sought to purchase than they did; fake tax returns that made it look like the borrowers had greater income than they did; phony interim financial statements that made other businesses the borrowers owned look more profitable than they were; and a number of other misrepresentations.
Loren and Joon Park charged a loan brokerage fee to both the financial institutions and the borrowers for assembling and submitting loan application packages that resulted in the issuance of SBA-guaranteed loans. The fees charged to borrowers were hidden from the financial institutions underwriting the loans. The Parks also had undisclosed ownership interests in businesses involved in some of the transactions and received loan proceeds, unbeknownst to the lenders, in a number of transactions. In one instance, the Parks did not have an ownership interest in a company involved in a transaction but persuaded the seller to assign some of the loan proceeds to them and then converted those proceeds to their own personal use.
Loren Park was on a business trip to South Korea when he learned that he had been indicted in this case. Loren Park had intended to return to the United States, but after learning that he had been indicted, he chose not to return and not face the charges pending against him. Subsequently, he also made several public information requests to the FBI, from South Korea, requesting his criminal record in order to determine whether there were still charges pending against him.
On June 20, 2013, co-defendant Joon Park, a/k/a “Joon Pak” and “Joon Paik,” age 48, of Falls Church Virginia, was sentenced to 188 months in prison, followed by four years of supervised release, and was ordered to pay a money judgment of $91,449,700 and forfeit all the property involved in the offense.
Five other co-defendants were sentenced to between a year and a day in prison and 51 months in prison and were ordered to pay restitution of between $216,472.92 and $3,593,432. In addition, the co-defendants were ordered to pay money judgments of between $11,832,000 and $18,764,900.
United States Attorney Robert K. Hur thanked the SBA Office of Inspector General, the U.S. Postal Inspection Service, and the FBI for their work in the investigation. Mr. Hur praised Assistant U.S. Attorneys Leo J. Wise and Martin J. Clarke, who prosecuted the case.