Bank CEO sentenced for taking bribes in Small Business Administration-backed loans | USAO-SDNY

Damian Williams, the United States Attorney for the Southern District of New York, today announced the conviction of EDWARD SHIN, then CEO of a Pennsylvania-based bank (the “Bank”), for accepting bribes -de-vin in connection with the issuance of loans by the Bank. guaranteed by the United States Small Business Administration (“SBA”). SHIN was arrested in May 2019 and accused of taking bribes by siphoning off a portion of SBA-backed loan fees and forcing the bank to issue SBA-backed and commercial loans to businesses. in which SHIN had a secret interest. The charges are the culmination of a joint investigation by the Federal Deposit Insurance Corporation – Office of the Inspector General (“FDIC-OIG”), Homeland Security Investigations (“HSI”), the SBA Office of the Inspector General ( “SBA-OIG”), and the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”). SHIN was found guilty on all counts in Manhattan federal court before U.S. District Judge John P. Cronan.

According to the allegations in the criminal complaint, indictment, and statements made at the Manhattan federal trial:

The SBA helps Americans start, build, and grow businesses by guaranteeing certain loans made by banks to help those businesses succeed. Between 2009 and 2013, the Bank offered a range of financial products, including SBA-backed loans to small businesses in the New York and New Jersey area, which the Bank could only provide on the condition that all aspects of these loans comply with SBA regulations. and SBA standard operating procedures. In particular, SBA regulations and procedures prohibited bank officers, including SHIN, from receiving payments related to SBA-guaranteed loans and prohibited banks from making such loans to any institution in which a bank held a stake.

Notwithstanding these regulations, SHIN, then CEO of the Bank, secretly solicited and received bribes in connection with SBA-guaranteed loans issued by the Bank and caused the Bank to make commercial and SBA-guaranteed loans. SBA to companies in which SHIN held secret ownership. interests. Specifically, when the Bank provided business loans that did not involve the use of an actual broker, SHIN nevertheless arranged for his longtime friend, a real estate and loan broker (the “Broker ”), or inserted unnecessarily in the transaction only to generate a brokerage fee that could be shared with SHIN; in fact, the broker did no real work to earn a commission on these trades, but shared the “brokerage fee” with SHIN as an illegal bribe.

SHIN also caused the Bank to issue SBA-guaranteed loans to companies in which it secretly retained an equity stake, in violation of SBA regulations and procedures. For example, in or around June 2010, the Bank provided an SBA-backed loan of approximately $950,000 to a business in New York, New York. Although the documents submitted to the Bank for the purposes of obtaining the loan did not mention SHIN’s financial interest, the business was secretly operated as a partnership between SHIN, the broker and another person. The loan eventually became delinquent, ultimately resulting in a loss to the Bank of approximately $591,278.60.

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SHIN, 58, of Ambler, Pennsylvania, was convicted of one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution, which carries a potential maximum sentence of 30 years prison, one count of conspiracy to commit bank corruption, which carries a potential maximum sentence of five years in prison, one count of conspiracy to commit loan fraud, which carries a potential maximum sentence of five years in prison, one other count of conspiracy to commit bank fraud, which carries a potential maximum sentence of 30 years in prison, and one count each of bribery banking and theft of funds by a bank officer, each carrying a potential maximum sentence of 30 years in prison. The maximum potential penalties in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the accused will be determined by the judge.

Mr. Williams commended the outstanding investigative work of the FDIC-OIG, HSI, SBA-OIG and SIGTARP.

This case is handled by the Bureau’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant U.S. Attorneys Tara La Morte, Anden Chow, Jessica Greenwood and Daniel M. Tracer are in charge of the prosecutions.

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