New Canaan Man Accused Of Defrauding CT, Washington Small Business Loan Programs: Feds

NEW CANAAN, CT — A New Canaan man was one of five charged this week in connection to fraudulent small business loan applications in two states, according to court officials.

U.S. Attorney for the District of Connecticut David Sullivan and P.J. O'Brien, a special agent in charge of the New Haven division of the Federal Bureau of Investigation, announced in a news release Monday a federal grand jury returned a 20-count indictment on May 14 charging Stephen Walker, 30, of New Canaan, and four other state residents with offenses related to fraudulent small business loan applications in both Connecticut and Washington.

Walker was arrested Monday and pleaded not guilty, along with three Danbury residents and one Hartford resident. All five were released on bond pending trial, according to Sullivan and O'Brien.

According to the indictment, the National Development Council, now known as Grow America, was a not-for-profit lender that provided 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 Connecticut 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, according to Sullivan and O'Brien.

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, Sullivan and O'Brien said.

According to Sullivan and O'Brien, 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, the group is accused of using stolen personal and business identities or creating false business identities to apply to NDC for small business loans through the CT Boost and Flex programs, Sullivan and O'Brien said.

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, according to Sullivan and O'Brien.

The Hartford resident, 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, Sullivan and O'Brien said.

The Hartford resident also specifically requested to be the loan processor on certain loan applications submitted by her co-conspirators in order to further the scheme, according to Sullivan and O'Brien.

It is alleged that the group applied for and obtained 12 loans totaling more than $2 million through this scheme, Sullivan and O'Brien 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 charge carries a maximum prison term of 20 years, according to Sullivan and O'Brien.

The indictment also charges each of the five defendants with one more count of making illegal monetary transactions, an offense that carries a maximum prison term of 10 years on each count, Sullivan and O'Brien said.

Sullivan stressed that an indictment is not evidence of guilt; charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

More information about this case is available here.