Federal authorities on Monday arrested a 30-year-old New Canaan man following a 20-count indictment charging five Connecticut residents with defrauding small business loan programs.
According to an indictment returned last week, the New Canaan man and four others—from Danbury and Hartford—submitted fraudulent business loan applications here and in Washington state, the U.S. attorney for the District of Connecticut and special agent in charge of the FBI’s New Haven Division said in a joint press release.
They “used stolen personal and business identities, or created false business identities, to apply to NDC for small business loans through the CT Boost and Flex programs,” the press release said. The agencies referred to: the National Development Council or “NDC,” now known as Grow America, a nonprofit lender that provided capital to small businesses, including through state-sponsored small business loan programs; the Connecticut Small Business Boost Fund, an economic initiative supported by the state Department of Economic and Community Development, connecting small businesses and nonprofits with support services, including access to flexible funding for capital expenditures; and the Small Business Flex Fund, an economic initiative supported by the Washington state Department of Commerce.
“In connection with the loan applications, they created and submitted false business records, including fraudulent certificates of organization, false income statements, false balance sheets, and false tax returns,” the press release said.
One of the other five arrested people, a 43-year-old Hartford woman, worked as a NDC contractor responsible for processing and underwriting small business loan applications. She “specifically requested to be the loan processor on certain loan applications submitted by her co-conspirators in order to further the scheme,” the press release said.
The co-conspirators “applied for and obtained 12 loans totaling more than $2 million through this scheme,” it said.
The indictment charges each of the five defendants with one count of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering and multiple counts of wire fraud—each carries a maximum term of imprisonment of 20 years.
“The indictment also charges each of the five defendants with one or more counts of making illegal monetary transactions, an offense that carries a maximum term of imprisonment of 10 years on each count,” it said.
Each has entered a plea of not guilty and has been released on bond pending trial.
The case is being investigated by the FBI with assistance from the Criminal Investigation Division of the FBI, as well as the Meriden and Danbury Police Departments, the release said. Assistant U.S. Attorney Stephanie T. Levick is prosecuting the case.