Government Loan Programs

March 31, 2020

Oklahoma-based mortgage lender Finance of America Reverse (FAR) has agreed to pay $2.47 million to resolve allegations that its predecessor, Urban Financial Group Inc., violated federal loan requirements as well as the False Claims Act while participating in the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM) reverse mortgage program, which allows seniors to supplement their incomes by withdrawing equity on their homes through federally-insured loans.  Urban Financial Group, which was acquired by FAR in 2013, had been accused of originating and underwriting hundreds of HECM loans using forms that improperly influenced home appraisal values.  DOJ; USAO DC

January 31, 2020

A bidder in the sale of a loan from the Department of Energy has agreed to pay $29 million to resolve allegations of colluding to rig the auction of the loan, thus depriving the agency of a fair bidding process and reducing the amount recovered by the agency.  The allegations that Hybrid Tech Holdings LLC, Hybrid Technology LLC, and Ace Strength International LTD exerted pressure on two other bidders to suppress their bids during the live auction were made by whistleblowers William Baldiga and the FAH Liquidating Trust in a qui tam suit.  The relators will share in $5.2 million of the recovery.  DOJ; USAO DC

September 19, 2019

Following his conviction at trial in September 2018, Azam Doost, the owner of a marble mining company in Afghanistan, has been sentenced to 4.5 years in prison, and ordered to pay $8.9 million in forfeiture and restitution to the government.  Doost had been convicted for his role in fraudulently obtaining and failing to repay a $15.8 million loan from the Overseas Private Investment Corporation, a U.S. government agency, to Equity Capital Mining LLC, which Doost owned at the time.  DOJ

June 12, 2019

In connection with the development of the Lakeway Regional Medical Center in Texas, a number of individuals and entities have agreed to pay $1.1 million to resolve claims that they made false claims in obtaining a loan insured by the Federal Housing Administration under a HUD program that insures loans to build hospitals in underserved areas.  Pacific Medical Buildings LLC, PMB Lakeway LLC, RD Development Partners LLC, Lakeway Management LLC, J&L Rush Family Partnership LP, Jeff Rush, and Brad Daniel, were alleged to have delayed refunds to investors who had cancelled their investments in order to make it appear as if the project satisfied mortgage covenants regarding the cash on hand required to close the loan. The settlement also resolves allegations that the settling parties received impermissible distributions of project funds. DOJ

May 7, 2019

The owners of a Colorado biomass power plant agreed to pay $2.6 million to settle allegations concerning fraud impacting the U.S. Treasury’s “1603 Program,” which reimburses companies up to 30%, in lieu of tax credits, for placing renewable energy properties into service. The company at the center of the fraud, Eagle Valley Clean Energy, allegedly applied for and received a 30% advance on a fee it was to pay co-defendant Evergreen Clean Energy, LLC for unspecified development services. Eagle Valley wrote off the fee but failed to return the advance to the U.S. Treasury. As part of the settlement, Eagle Valley paid $2.4 million, and the two owners of Eagle Valley, Evergreen, and parent company Evergreen Clean Energy Corporation—Dean Rostrom and Kendric Wait—paid $125,000 each. USAO CO

March 14, 2019

Former loan broker Loren Young Park pleaded guilty to bank fraud in connection with a scheme to obtain Section 7(a) loans guaranteed by the Small Business Administration loans on behalf of applicants who did not qualify for the loans.  Park and co-defendants submitted fraudulent documents in support of the loan applications, charged undisclosed fees, and failed to disclose interests they had in some of the applicants or their funding.  Park's plea agreement provides for a nine year prison sentence.  USAO MD; USAO MD re: sentencing

January 30, 2019

Laserlith Corporation, Black Hills Nanosystems Corporation, Blue Sky Engineering Inc., along with several corporate representatives, have paid $1.1 million in criminal restitution for making false statements in applications for loans from programs run by NASA, the National Science Foundation, and the Department of Energy.  Between 2012 and 2016, the companies sought funding through the agencies' Small Business Innovation Research Program and Small Business Transfer Technology Research Program, but misrepresented their status as related corporations sharing facilities and performing essentially equivalent work.  DOJ