Four Indianapolis executives have been sentenced to over 16 years behind bars for their part in a 13-year fraud scheme that targeted the US Small Business Administration (SBA).
The quartet worked for now-defunct lender Banc-Serv Partners, an outsourcing provider that assessed small businesses for their eligibility for loans, amongst other things.
However, the co-conspirators worked to trick the SBA into providing loans for clients they knew weren’t eligible, according to the Department of Justice (DoJ).
In a scheme that ran from 2004 to October 2017, they secured loans on behalf of various lenders, obtaining SBA guarantees by misrepresenting what the loans would be used for, hiding facts about some borrowers and even diverting denied loan applications into “expedited approval channels” at the SBA.
When the loans defaulted, the four execs submitted requests to the SBA to purchase the loans from investors and lenders, effectively shifting financial liability to the government agency.
Investigators and prosecutors argued the four had effectively robbed US small businesses which would otherwise have received loan support from the SBA.
“These sentences hold the defendants accountable for their egregious conduct to cheat a government-guaranteed loan program – by lying on loan documentation, concealing key information and asking the government to pay for defaulted loans,” said inspector general Jay Lerner of the Federal Deposit Insurance Corporation (FDIC).
“We remain committed to working with our law enforcement partners and investigating those who seek to exploit federal programs and undermine the integrity of our nation’s banks.”
The four executives are: former Banc-Serv president, founder and owner Kerri Agee; former COO Kelly Isley; former CMO Chad Griffin; and co-founder Matthew Smith, 53. A fifth co-conspirator, Nicole Smith, 44, of Indianapolis, is scheduled to be sentenced on January 7, 2022.
Agee was sentenced to 68 months, Isley got 57 months, Griffin was handed 28 months and Smith received 46 months.
Alongside their sentences, Agee and Isley were each ordered to pay $2.2m, Griffin was ordered to pay $685,000, and Matthew Smith was ordered to pay $1.7m