Four Executives Sentenced in SBA Fraud Case

Legal Sentencing

Four Indiana executives once associated with the now-defunct Banc-Serv Partners LLC were sentenced to prison in federal court this week. The government alleged that all four were associated with a 13-year conspiracy that involved loan guarantee programs.

According to the Small Business Administration (SBA): Kerri Agee, 46, of Carmel, Indiana, the president, founder and owner of Banc-Serv, was sentenced to 6-1/2 years in federal prison; Kelly Isley, 41, of Westfield, Indiana, the former chief operating officer of Banc-Serv, was sentenced to just under five years in federal prison; Chad Griffin, 48, of Carmel, Indiana, the former chief marketing officer of Banc-Serv, was sentenced to just over two years in federal prison; Matthew Smith, 53, of Brownsburg, Indiana, the co-founder of Banc-Serv and a former director of Bridge Business Bancorp, was sentenced to just under four years in federal prison.

The agency stated in a news release that an “additional co-conspirator,” Nicole Smith, 44, of Indianapolis, is scheduled to be sentenced on Jan. 7, 2022.

They were convicted of conspiracy to commit wire fraud affecting a financial institution, according to the government.

The agency stated in its post-conviction news release: “The defendants fraudulently obtained SBA-guaranteed loans on behalf of their clients, knowing that the loans did not meet SBA’s guidelines and requirements for the guarantees. The evidence at trial proved that from approximately 2004 until October 2017, the defendants helped originate SBA loans through Banc-Serv on behalf of various financial institutions and other lenders. On multiple occasions, they fraudulently obtained SBA guarantees for loans they knew to be ineligible.”

The government alleged that they perpetrated the scheme by misrepresenting the intended purposes for the loans and hiding information about borrowers that would have disqualified them.

The SBA stated in its news release that the perpetrators took steps to shift bad loans from private lenders to the government.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division said in a prepared statement: “Fraud against SBA loan programs directly harms taxpayers and undermines the public’s faith in important community programs. The Criminal Division is committed to prosecuting the offenders who exploit these programs and abuse the public trust.”

Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation said in a prepared statement: “These sentences hold the defendants accountable for their egregious conduct to cheat a government-guaranteed loan program — by lying on loan documentation, concealing key information and asking the government to pay for defaulted loans. We remain committed to working with our law enforcement partners and investigating those who seek to exploit federal programs and undermine the integrity of our nation’s banks.”