Last week, DoJ announced that California-based Saehan Bank will settle fraud allegations related to Small Business Administration loans by paying $2.2 million. According to the allegations, Saehan violated the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act by misrepresenting “information to induce the SBA to fund a loan under the SBA’s 504 loan program, which offers small businesses long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization.” In a prepared statement, DoJ explained:
Before finalizing a 504 loan, the SBA requires certain certifications regarding the borrower’s financial condition and ability to repay the loan. The government alleges that Saehan Bank falsely certified that the borrowers had experienced no adverse change in their financial circumstances since their initial loan application, even though the bank knew that the borrowers were facing serious financial difficulties. Relying on these alleged misrepresentations, the SBA approved the borrowers’ 504 loan.
To report fraud against the taxpayers, contact Frohsin & Barger.