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FBI – Virginia Settlement Attorney Sentenced to Jail for Conspiring to Fraudulently Obtain Over $100 Million in SBA-Backed Loans

BALTIMORE—U.S. District Judge William D. Quarles, Jr. sentenced Seung E. Oh, aka Sandy Oh, 44, of Great Falls, Virginia, today to 51 months in prison, followed by three years of probation , for conspiracy to commit bank fraud and money laundering in connection with a scheme to fraudulently obtain business loans guaranteed by the Small Business Administration, resulting in losses of more than $100 million. Judge Quarles also ordered Oh to pay a money judgment of $11,832,000, pay restitution of $3,593,432, and forfeit all property involved in the offense.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Peggy E. Gustafson, Inspector General of Small Business Administration; Postal Inspector in Charge Gary R. Barksdale of the United States Postal Inspection Service – Washington Division; and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.

According to her plea agreement, Oh is an attorney with offices in Annandale, Va., and the owner-operator of Washington Settlement Group (WSG), a title company located in Annandale. Around 1998, Oh met Joon Park and his brother, Loren Park, who owned and operated Jade Capital, a loan brokerage firm. Oh knew Jade Capital specializes in securing loans for people interested in buying and refinancing small businesses in the mid-Atlantic region, some of which have been settled by the law firm of Oh and WSG. Oh knew Parks encouraged potential borrowers using Jade Capital’s services to apply for business loans through the SBA’s Section 7(a) program, which guaranteed 75-90% of qualified loans made by banks. and other commercial credit institutions. Under this program, small business owners applying for the loan had to invest a certain amount of their own money, called an equity injection, before qualifying for a loan. The banks and other lending institutions providing the loan only bore the risk of default up to the percentage of the loan unsecured by the SBA.

During Oh’s relationship with Joon and Loren Park, and to foster more business with their company, Oh agreed to use his settlement company and law firm to facilitate the closing of loans for transactions. who otherwise would not meet the lending parameters of banks. lending, including banks authorized to lend under the SBA’s Section 7(a) program. Oh helped Parks misrepresent to banks and the SBA the true amount of money involved in the transactions and/or the real names of the parties taking part in the transactions.

To do this, Oh would sometimes agree to “clean up” a transaction, whereby Parks negotiated with the seller a sale price lower than the price indicated on the sales contract submitted to the bank, and/or they increased the loan by the amount required for down payment. By doing so, they reduced the amount of money the buyer actually had to put into the transaction and hid that the buyer did not have sufficient equity to qualify for the loan. To conceal these arrangements, Oh filled out the settlement sheets as if the buyer had made the required cash injection and the seller had received the full contract price.

Another way Oh helped ease the loan close for Jade Capital was when she “faced” the cash injection from the buyer. Oh temporarily lent part of the buyer’s initial payment by taking other people’s money from the escrow accounts of his law firm or title company. Joon and Loren Park then refunded the money paid after the settlement, usually from their share of the proceeds of that deal or a later deal. As with the “netting” system, the settlement sheets and all other documents related to the “fronted” transaction would incorrectly indicate that the buyer injected his own money into the transaction in accordance with the agreed financing conditions established by the lending institution.

Joon Park, aka “Joon Pak” and “Joon Paik,” 43, of Falls Church, Virginia, pleaded guilty and was sentenced to 188 months in prison. Judge Quarles also ordered Park to pay a money judgment of $91,449,700 and forfeit all property involved in the offense. Nick Park, aka Nochol Park, 46, of McLean, Virginia, was sentenced to 33 months in prison; and Joo Hyuk “John” Lee, 39, of Richmond, Virginia, and Sang Hyun Kim, 35, of Fairfax, Virginia, were each sentenced to three years in prison, for conspiracy to commit bank fraud. Kim’s wife, In Jung Ham, 30, also of Fairfax, was sentenced to a year and a day in prison for her role in the scheme. Judge Quarles ordered Lee to pay restitution of $1,900,325 and ordered Ham to pay restitution of $216,472.92. Lee, Kim and Ham were also ordered to forfeit the proceeds of the scheme and pay monetary judgments of $18,764,900, $13,432,000 and $15,725,000, respectively.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama created the Financial Fraud Interagency Task Force to lead an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a wide range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement agencies who, working together, leverage a powerful array of criminal and civil resources. The task force works to improve federal executive efforts and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who commit financial crimes, to combat discrimination in the loan and financial markets, and to recover profits from victims of financial crimes.

United States Attorney Rod J. Rosenstein thanked the SBA’s Office of Inspector General, the United States Postal Inspection Service and the FBI for their work in the investigation. Mr. Rosenstein praised Assistant U.S. Attorneys Leo J. Wise and Martin J. Clarke, who prosecuted the case.