Hartford Woman Charged In Fraudulent Business Loan Scheme: Feds

HARTFORD, CT—A Hartford woman was one of five suspects indicted by a federal grand jury in connection with a fraudulent business loan scheme.

David X. Sullivan, U.S. attorney for Connecticut, and P.J. O’Brien, special agent in charge of the New Haven Division of the Federal Bureau of Investigation, said Monday a federal grand jury in New Haven returned a 20-count indictment against Teresa Vagas, 43, of Hartford with offenses related to fraudulent small business loan applications in Connecticut and Washington.

The indictment was returned May 14, and Vargas was arrested May 15, officials said, with Vargas — as well as the other four suspects — pleading "not guilty."

Vargas is released on bond pending trial.

According to the indictment, the National Development Council (NDC), now known as Grow America, was a not-for-profit lender providing capital to small businesses, including through state-sponsored small business loan programs.

The Connecticut Small Business Boost Fund was an economic initiative supported by the state Department of Economic and Community Development that connects Connecticut small businesses and non-profits with support services, including access to flexible funding for capital expenditures.

The Small Business Flex Fund was an economic initiative supported by the Washington State Department of Commerce that connected Washington state small businesses and nonprofits with support services, including access to flexible funding for capital expenditures.

NDC worked with CT Boost and Flex to provide loan funding to small businesses in Connecticut and Washington, respectively.

As alleged in the indictment and statements made in court, four of the suspects 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.

Sullivan said they created and submitted false business records, including fraudulent certificates of organization, false income statements, false balance sheets, and false tax returns.

He said Vargas, who was a contractor for NDC and responsible for processing and underwriting small business loan applications, processed some of the fraudulent loan applications and submitted them to NDC for approval.

According to Sullivan, Vargas also specifically requested to be the loan processor on certain loan applications submitted by her co-conspirators to further the scheme.

It is alleged that the co-conspirators applied for and obtained 12 loans totaling more than $2 million through this scheme, he 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, according to authorities.

Each of these charges carries a maximum term of imprisonment of 20 years.

The indictment also charges each of the five with one more count of making illegal monetary transactions, an offense that carries a maximum term of imprisonment of 10 years per count.

For more information on the case, click on this link.