PHILADELPHIA, PA — A California man was sentenced Tuesday to 66 months in prison for his role in a scheme that defrauded banks and the Small Business Administration of millions of dollars in fraudulent loans, federal prosecutors said.
Frank Hamilton, 55, of Simi Valley, was also ordered by U.S. District Judge Wendy Beetlestone to serve two years of supervised release and pay $6,093,024.90 in restitution, according to an announcement by U.S. Attorney David Metcalf.
Hamilton previously pleaded guilty to one count of wire fraud conspiracy affecting a financial institution.
According to court filings, Hamilton and his co-conspirators began submitting fraudulent applications for SBA 7(a) loans before the COVID-19 pandemic. Those loans are issued by private lenders and partially guaranteed by the SBA.
During the pandemic, the group shifted to Economic Injury Disaster Loans and Paycheck Protection Program loans, which were backed or fully guaranteed by the SBA and designed to help businesses maintain operations and payroll.
Prosecutors said Hamilton advised others on how to submit false loan applications and helped create fraudulent supporting documents, including tax returns.
He also assisted in obtaining so-called “shelf companies,” or pre-registered businesses with no real operations, to make loan applicants appear more established.
Authorities said Hamilton helped open bank accounts, create websites and email addresses for the entities, and at times participated in calls with lenders to support the applications.
To further conceal the scheme, Hamilton and others used the names of co-conspirators or their companies in multiple applications to create the appearance of legitimate business relationships, according to prosecutors.
In addition to assisting others, Hamilton applied for fraudulent loans for his own businesses, including several shelf companies he controlled.
Prosecutors said the group applied for approximately $9 million in loans, of which about $7,088,010 was funded.
As part of the scheme, participants turned over most of their loan proceeds to Hamilton, who claimed he would invest the funds and return money in installments to cover loan payments and provide limited personal income.
Authorities said Hamilton returned only a portion of the funds and kept most of the proceeds. Despite receiving more than $1 million in loans for his own companies, he made no payments on those loans.
Most of the loans ultimately defaulted, resulting in losses exceeding $7 million to the SBA, according to prosecutors.
The case was investigated by the Small Business Administration Office of Inspector General, the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigation, Homeland Security Investigations, and Immigration and Customs Enforcement.
It was prosecuted by Assistant U.S. Attorney Judy Smith and Department of Justice Trial Attorney Varun Trivedi.
For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News and MSN.