Five former officers and employees of Banc-Serv Partners LLP, a lending service provider, have been convicted by a federal jury for their roles in a 13-year conspiracy to defraud the Small Business Administration (SBA). The scheme targeted SBA programs designed to guarantee loans for small businesses, resulting in approximately $5 million in fraudulent loan guarantees.
The defendants, including high-ranking executives of Banc-Serv Partners, knowingly secured SBA-backed loans for clients who did not meet the agency’s stringent guidelines. Kerri Agee, 46, former president, CEO, and founder; Kelly Isley, 40, former chief operating officer; Nicole Smith, 44, former employee; Chad Griffin, 48, former chief marketing officer; and Matthew Smith, 52, co-founder and former director at a lending institution partnering with Banc-Serv Partners, were all found guilty.
Evidence presented during the trial revealed that from 2004 to 2017, these individuals facilitated SBA loan originations for various financial institutions. They repeatedly and fraudulently obtained guarantees for loans that the SBA had specifically deemed ineligible. Their methods included deliberate misrepresentation of loan purposes and the unlawful manipulation of expedited SBA approval channels for previously rejected applications.
When these fraudulently guaranteed loans inevitably defaulted, the Banc-Serv Partners team furthered their scheme by submitting reimbursement requests to the SBA. This action compelled the SBA to purchase the defaulted loans from investors and lending institutions, effectively transferring the financial burden of these ineligible loans to the government agency. The loans presented in court as evidence amounted to roughly $5 million in guaranteed disbursements, all of which were secured fraudulently and did not qualify for SBA guarantees.
The convictions are severe. Agee, Isley, and Nicole Smith were each convicted of conspiracy to commit wire fraud affecting a financial institution and multiple counts of wire fraud affecting a financial institution. Griffin was convicted of conspiracy to commit wire fraud affecting a financial institution, and Matthew Smith was convicted of conspiracy to commit wire fraud. For conspiracy or fraud affecting a financial institution, the maximum sentence is 30 years per count. The conspiracy to commit wire fraud charge carries a maximum sentence of 20 years. The actual sentences will be determined by a federal district court judge, considering U.S. Sentencing Guidelines and other legal factors.
This case was a collaborative effort between multiple agencies. Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division, Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), Special Agent in Charge Paul Keenan of the FBI Indianapolis Field Office, and Inspector General Hannibal “Mike” Ware of the Small Business Administration Office of Inspector General (SBA-OIG) jointly announced the convictions. The investigation was conducted by the FDIC-OIG, the FBI, and the SBA-OIG, with prosecution led by Assistant Chief William E. Johnston and Trial Attorney Vasanth Sridharan of the Criminal Division’s Fraud Section, with significant assistance from Trial Attorney Brandon Burkart. The Department of Housing and Urban Development Office of Inspector General also contributed to the investigation.
The Fraud Section of the Criminal Division plays a crucial role in the Department of Justice’s broader efforts to combat white-collar crime across the nation, as demonstrated by this successful prosecution of the Banc-Serv Partners fraud case.
