Four former Valley Bank and Vital Financial Services executives have pleaded guilty to a massive $4.5 million Small Business Administration (SBA) fraud scheme, according to the Department of Justice (DOJ). Michael Slater, 65, Larry Henson, 70, Andrew Erpelding, 43, and Susan McLaughlin, 68, are accused of conspiring to defraud the SBA by securing loan guarantees that did not meet the agency’s guidelines. They altered payment histories, renamed businesses, and concealed defaults on loans, shifting losses to the SBA when the loans defaulted.
Slater, former President and Founder of Vital Financial Services, pleaded guilty on September 20th. Henson, former President and Chairman of Valley Bank, followed suit on November 9th. Erpelding, ex-Vice President and Regional Manager of Valley Bank, confessed on September 21st, while McLaughlin, ex-Vice President for Credit Administration at Valley Bank, entered a plea on November 18th. Each faces up to 30 years in prison as they each pleaded guilty to conspiracy to commit wire fraud affecting a financial institution.
The investigation was led by the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau (FRB/CFPB-OIG), the SBA Office of Inspector General (SBA-OIG), the FBI, and the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG). Assistant Attorney General Kenneth A. Polite Jr., U.S. Attorney Richard D. Westphal for the Southern District of Iowa, and other federal officials announced the charges.
Prosecuting the case are Trial Attorney Siji Moore of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Adam Kerndt of the Southern District of Iowa. The sentences will be determined by a federal district court judge after considering the U.S. Sentencing Guidelines and other statutory factors.
This is a stark reminder of the consequences for financial fraud and the ongoing efforts to protect the integrity of the SBA’s programs.
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Key Facts
- State: Iowa
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes
- Source: Official Source ↗
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