Bank CEO Arrested For Taking Bribes In Connection With Loans Guaranteed By The Small Business Administration
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the arrest of EDWARD SHIN, the CEO of a Pennsylvania-based bank (the “Bank”), for taking bribes in connection with the Bank’s issuance of loans that were guaranteed by the United States Small Business Administration (“SBA”).
SHIN was arrested pursuant to a criminal complaint charging him with taking bribes by siphoning off a portion of commissions on SBA-guaranteed loans and causing the Bank to issue SBA-guaranteed loans to companies in which SHIN had a secret interest.
According to the allegations in the Criminal Complaint filed in Manhattan federal court today, SHIN secretly solicited and received bribe payments in connection with SBA-guaranteed loans issued by the Bank and caused the Bank to extend SBA-guaranteed loans to companies in which SHIN had secret ownership interests.
The SBA helps Americans start, build, and grow businesses by guaranteeing certain loans made by banks to help those businesses succeed. Between 2009 and 2012, EDWARD SHIN was the CEO of the Bank. During that period, the Bank offered a range of financial products, including SBA-guaranteed loans to small businesses in the New York-New Jersey area, which the Bank could extend only on the condition that all aspects of those loans complied with SBA regulations and SBA’s standard operating procedures.
Notwithstanding these regulations, SHIN secretly arranged to receive a portion of the Broker’s fee when the Bank issued a business loan involving a certain broker (the “Broker”). On other occasions, when the Bank issued a business loan that did not involve the use of an actual broker, SHIN arranged to have the Broker inserted unnecessarily into the transaction solely to generate a broker fee that could be shared with SHIN; in fact, the Broker did no actual work to earn a commission on those transactions, but split the “broker’s fee” with SHIN as an illegal kickback.
SHIN also arranged for the Bank to issue SBA-guaranteed loans to businesses in which he secretly retained an ownership interest, in violation of SBA regulations and procedures. For example, in or about December 2010, the Bank issued an SBA-guaranteed loan for approximately $950,000 to a business in New York, New York. Although documents submitted to the Bank for purposes of securing the loan did not mention SHIN’s ownership interest, the business was secretly operated as a 50-50 partnership between SHIN and the Broker.
Edward Shin, the CEO of a Pennsylvania bank, allegedly exploited his position as a bank officer to illegally issue Small Business Administration loans to entities in which he had a financial interest. Furthermore, Shin allegedly took kickbacks on commissions for those loans from a third party who did no legitimate work in the loan process.
The charges are the culmination of a joint investigation by the Federal Deposit Insurance Corporation – Office of Inspector General (“FDIC-OIG”), Homeland Security Investigations (“HSI”), the SBA Office of the Inspector General (“SBA-OIG”), the Federal Bureau of Investigation (“FBI”), and the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”).
SHIN is expected for presentment this afternoon in Manhattan federal court before U.S. Magistrate Judge James L. Cott.
Defendant: EDWARD SHIN
Criminal Charges: Taking bribes by siphoning off a portion of commissions on SBA-guaranteed loans and causing the Bank to issue SBA-guaranteed loans to companies in which SHIN had a secret interest.
City and State: New York
Exact Date: 2023
Sentence or Outcome: To be determined
Dollar Amounts: Approximately $950,000
Key Facts
- State: New York
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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