Three former executives of Valley Bank, a former financial institution based in Moline, Ill., And the chairman of Vital Financial Services (Vital Financial), a loan service provider, have pleaded guilty to conspiracy to defraud Small Business Administration (SBA) as part of with its small business loan guarantee programs.
According to a court document, the defendants – Michael Slater, 65, of Clive, Iowa, former chairman and founder of Vital Financial; Larry Henson, 70, of Davenport, Iowa, former chairman and chairman of Valley Bank; Andrew Erpelding, 43, also of Davenport, Iowa, former vice president and regional manager of Valley Bank; and Susan McLaughlin, 68, of Bettendorf, Iowa, former vice president of credit administration at Valley Bank – conspired and fraudulently obtained loan guarantees from the SBA on behalf of Valley Bank borrowers, knowing that the loans did not meet SBA guidelines and requirements for collateral. They did this, among other things, by changing loan repayment histories, renaming companies, and hiding the fact that borrowers had already defaulted on their loans. When the fraudulently secured loans defaulted, the defendants submitted repayment requests to the SBA to purchase the overdue loans from investors and lending institutions, thereby transferring the majority of the losses on the ineligible loans to the SBA. . In total, the defendants attempted to secure collateral on loans over $ 14 million, were successful in securing collateral on loans over $ 9 million, and caused SBA losses of over $ 9 million. $ 4.5 million.
All four accused pleaded guilty to conspiring to commit wire fraud involving a financial institution. McLaughlin pleaded guilty on September 20; Erpelding on September 21; Henson on November 9; and Slater on November 18. The accused each face a maximum sentence of 30 years in prison. A federal district court judge will determine any sentence after considering US sentencing guidelines and other statutory factors.
Deputy Attorney General Kenneth A. Polite Jr. of the Criminal Division of the Department of Justice; US Attorney Richard D. Westphal for the Southern District of Iowa; Inspector General Jay N. Lerner of the Office of the Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG); Inspector General Mark Bialek of the Board of Governors of the Federal Reserve System and the Office of Consumer Financial Protection (FRB / CFPB-OIG); Inspector General Hannibal “Mike” Ware of the SBA’s Office of the Inspector General (SBA-OIG), Acting Deputy Director Jay Greenberg of the FBI’s Criminal Investigations Division, and Acting Inspector General Phyllis K. Fong from the Office of the Inspector General of the Federal Housing Finance Agency (FHFA-OIG) made the announcement.
The FDIC-OIG, FRB / CFPB-OIG, SBA-OIG, FBI and FHFA-OIG have investigated the case.
Attorney General Siji Moore of the Fraud Section of the Criminal Division and Assistant U.S. Attorney Adam Kerndt of the Southern District of Iowa are continuing the case.