Kurt Phelps, $8 Million Bank Fraud and Bribery, New Jersey 2022

A brazen scheme that spanned nearly a decade has finally come to an end, with a former bank employee admitting to his role in a $8 million fraud and bribery operation. Kurt Phelps, 53, of Flanders, New Jersey, pleaded guilty by videoconference before U.S. District Judge Kevin McNulty to an indictment charging him with one count of conspiracy to commit bank fraud and one count of bank bribery.

Phelps’ conspirators, who worked for Starnet Business Solutions Inc., a now-defunct New Jersey-based printing company, paid him large cash bribes in connection with the fraud scheme. The scheme, which took place from 2013 through 2019, involved obtaining millions of dollars in credit from Phelps’ employer, a bank. Starnet received a line of credit from the bank after providing materially false financial information, and the bank not only allowed Starnet to maintain the line of credit but also increased it at various times. By 2018, the line of credit was worth approximately $8 million, and Starnet has not repaid it.

Phelps was aware that the financial information Starnet provided to the bank was materially false and coached them on how to defraud the bank. He reviewed draft financial information for Starnet and provided feedback on how they should falsify the information before submission. Phelps also worked to ensure that the bank did not detect the fraud scheme by helping Starnet avoid audits and other quality control measures employed by the bank.

The conspiracy to commit bank fraud and bank bribery charges each carry a maximum potential penalty of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense, whichever is greatest. Sentencing is scheduled for October 3, 2022. Kurt Phelps, a former bank employee, pleaded guilty to conspiring to commit bank fraud and accepting bribes in a New Jersey court.

Kurt Phelps, a former bank employee, pleaded guilty to conspiring to commit bank fraud and accepting bribes in a New Jersey court. Phelps was aware that the financial information Starnet provided to the bank was materially false and coached them on how to defraud the bank.

Phelps solicited large cash bribes – tens of thousands of dollars at a time – from Starnet in connection with the fraud scheme. Phelps’ conspirators pooled cash to pay Phelps bribe payments. Over the course of the conspiracy, Phelps accepted hundreds of thousands of dollars in cash bribes.

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