California Woman Sentenced in Montana to More Than Four Years in Prison in Connection with Bank Fraud
HELENA – A federal judge this week sentenced Erika Rae Brown, 44, of San Diego, California, to 56 months in prison and to pay approximately $3.7 million dollars in restitution for money laundering in connection with bank fraud. U.S. District Court Judge Sam Haddon also sentenced Brown to serve three years of supervised release following her prison sentence. The sentencing follows a March 19, 2015, change of plea in which Brown pleaded guilty to money laundering.
The offense involved Erika Rae Brown obtaining a four-million dollar bank loan based on a series of fraudulent representations about a data storage facility project she claimed she was working on located on a property in Darby, Montana. In January 2009, the bank forwarded the data company’s loan application to the United States Department of Agriculture (USDA). Following representations by one of Brown’s associates regarding the project, the USDA committed to guarantee the loan. As part of the parameters for the loan, the bank required Brown to provide proof that companies were interested in using the data storage facility. Brown submitted letters to the bank from several well-known national companies that purportedly wanted to use the data storage. Subpoena returns from those companies later indicated that the letters were not, in fact, authored by the companies. Also, prior to the bank loan’s closing date, Brown provided the bank with a number of cashier’s checks and invoices in an effort to show that the company was in fact spending capital on the project. In reality, the checks were altered version of checks Brown had written for other expenses.
Brown assured the bank and USDA employees that her grandfather was able fund the project. It was later discovered that the loan disbursements were not used for the business projects and, in fact, a bathroom and office renovation represented the only work done on the project. Interviews of companies allegedly involved in working on the project confirmed that they had not done any work on it. Brown had submitted fabricated invoices to the bank. The loan defaulted in or about October 2011. A bank executive visited to the property in September 2012, which revealed that there were no improvements other than the bathroom and office space. A financial analysis of the loan proceeds revealed that Brown used the money for personal expenses, including $128,135 in rent for a Laguna Beach house and $5,825 for two Rolex watches. The bank foreclosed on the property in August 2013. The $3,741,047.82 in restitution ordered by the court represents the money Brown owes to the bank and the USDA.
Assistant U.S. Attorney Chad C. Spraker prosecuted the case, which was investigated by the Federal Bureau of Investigation, Internal Revenue Service, and the U.S. Department of Agriculture, Office of Inspector General. Brown will have to serve at least 85% of her sentence before being released from federal prison.