ROCKFORD, IL – A brazen scheme to defraud the Small Business Administration (SBA) has landed two bank officers and a customer in federal hot water. RYAN COLE, 45, of Garland, Tex., JAMES GRABER, 57, of Rockton, Ill., and KRISTIN KING, 44, of South Beloit, Ill., were named in a federal grand jury indictment Tuesday, accused of a multi-million dollar wire fraud and false statement conspiracy.
The feds allege the trio conspired to secure a $3,980,000 SBA-backed loan through deception. The scheme centered around SunLee Development, owner of a commercial building at 4001 North Perryville Rd., in Loves Park, Ill. SunLee was already drowning in debt – owing over $3 million on existing loans at the same bank where Graber and King held positions as Vice Presidents. Cole, a member of SunLee, personally guaranteed those loans, putting him squarely in the crosshairs when the building’s tenants stopped paying rent.
According to the indictment, Cole hatched a plan. He allegedly assembled a group of tenants, forming the Perryville Investment Group, with the intention of purchasing the building from SunLee using an SBA loan. This maneuver, prosecutors claim, was designed to mask the fact that the loan wouldn’t actually *reduce* the bank’s risk, and would essentially be a self-dealing transaction to prop up SunLee. On March 16, 2012, Cole, Graber, and King allegedly submitted the fraudulent loan application to the SBA.
The scheme quickly unraveled. The Perryville Investment Group defaulted on the SBA loan shortly after receiving the funds. The SBA, left holding the bag, began investigating, uncovering the alleged web of lies and concealed relationships. The indictment details how the defendants failed to disclose crucial information about the true nature of the deal, violating SBA regulations designed to protect taxpayer money.
Each defendant faces serious consequences if convicted. The charges of wire fraud and making false statements to the SBA carry a maximum penalty of up to 30 years in prison, a fine of up to $1 million, and an order to pay restitution. U.S. Magistrate Iain D. Johnston will oversee the arraignment of Graber and King on May 12, 2017, at 2:00 p.m. Cole’s arraignment date remains unconfirmed. It’s crucial to remember that an indictment is not proof of guilt; the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The case was announced by Acting U.S. Attorney Joel R. Levin, alongside Lawrence Valett of the Federal Reserve Board’s Office of Inspector General and Talmadge Gaylor, Special Agent-in-Charge of the SBA’s Office of Inspector General. Assistant U.S. Attorney Scott R. Paccagnini is prosecuting the case. This investigation highlights the ongoing federal crackdown on those who attempt to exploit SBA programs for personal gain, leaving taxpayers to foot the bill.
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Key Facts
- State: Illinois
- Agency: DOJ USAO
- Category: White Collar Crime
- Source: Official Source ↗
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