Former HSI Special Agent Sentenced to More Than Six Years in Prison on Tax, Structuring, and Concealment Charges
ROCKFORD — Two bank officers and a bank customer were charged Tuesday by a federal grand jury in Rockford with fraud and falsifying statements to the Small Business Administration, an agency of the United States.
RYAN COLE, 45, of Garland, Tex., JAMES GRABER, 57, of Rockton, Ill., and KRISTIN KING, 44, of South Beloit, Ill., were charged with wire fraud in connection with a loan application made to the SBA. Cole was also charged with two counts of making false statements to the SBA on a loan application. Graber and King were each charged with one count of making false statements to the SBA on a loan application.
As charged in the indictment, the SBA provides financial assistance to small businesses, in part, through loan guarantees to local banks. If the SBA approves a loan, it guarantees the lender that if the borrower defaults the SBA will repay part of the loan, thereby transferring the risk of borrower non-payment from the bank to the SBA, up to the amount of the guaranty. The local bank must disclose to the SBA whether the loan will reduce the exposure of the bank, disclose if the loan will be used to repay a debt already due to the bank, and disclose any relationships between the small business, its associates, and the lender.
According to the indictment, SunLee Development owned a commercial building at 4001 North Perryville Rd., in Loves Park, Ill. SunLee had three loans totaling more than $3 million at a local bank where Graber was employed as a Vice President and King was employed as a Vice President and Government Guaranteed Lending Specialist. Cole, a member of SunLee, was a guarantor of the three loans in the event of a default. SunLee was constantly behind on making its loan payments to the bank because tenants at 4001 North Perryville were not paying their rent.
The indictment alleges that Cole organized a group of the tenants at 4001 North Perryville to apply for an SBA guaranteed loan and to purchase the building from SunLee. The group of tenants and Cole became known as the Perryville Investment Group. The indictment alleges that on March 16, 2012, Cole, Graber and King submitted a $3,980,000 loan application to the SBA for the Perryville Investment Group that contained false statements and concealed material facts. Shortly after closing, the Perryville Investment Group had trouble making payments on the SBA loan and ultimately defaulted on the SBA loan.
Each count of wire fraud and making false statements and concealing material facts to the SBA carries a maximum penalty of up to 30 years in prison, a fine of up to $1 million, and restitution. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines. Graber and King are scheduled to appear for arraignment on May 12, 2017, at 2:00 p.m. in federal court in Rockford, before U.S. Magistrate Iain D. Johnston. Cole’s arraignment date has yet to be set.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed to be innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Lawrence Valett, Associate Inspector General of Investigations for the Federal Reserve Board - Office of Inspector General; and Talmadge Gaylor, Special Agent-in-Charge of the Central Regional Office of the SBA - Office of Inspector General.
The government is represented by Assistant U.S. Attorney Scott R. Paccagnini.