United States Files Counterclaims and Crossclaims in Small Business Administration Loan Fraud Case

U.S. Alleges Bank Falsely Certified Individuals’ Financial Circumstances Resulting in $1.7 Million SBA Loan That Should Not Have Been Approved

WASHINGTON – The United States filed False Claims Act counterclaims against Saehan Bank and crossclaims against Steve Yong Kim and Young Soon Kim in the Northern District of Oklahoma, the Justice Department announced today. The United States also filed a counterclaim and crossclaim under the Financial Institutions Reform, Recovery and Enforcement Act. The government alleges that Saehan Bank and the Kims made false statements in connection with the application process for a Small Business Administration (SBA) loan.

The allegations relate to the SBA’s 504 loan program, which offers small businesses long-term, fixed-rate financing to acquire major fixed assets, such as buildings or machinery, for expansion or modernization. Before the 504 loan closing, the SBA requires certain certifications regarding the borrower’s financial condition and ability to repay the loan. The government alleges that Saehan Bank and the Kims falsely certified that the Kims had experienced no adverse change in their financial circumstances, even though the bank and the Kims knew that the Kims were facing serious financial difficulties. The SBA approved the Kims’ $1.7 million 504 loan, but the government alleges that the Kims never made any payments on the loan.

"The SBA offers valuable assistance to small businesses and contributes to our nation’s economic development, and its programs must not be abused," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "The Justice Department will take action against those who betray the SBA’s trust and waste taxpayer dollars."

"Filing these claims sends a strong message that the government will not tolerate fraud, waste, or abuse of SBA programs," said SBA Inspector General Peggy E. Gustafson.

The case is a collaborative effort among several federal agencies, including the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Oklahoma, and the SBA.