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(Undated) -- Three former bank executives from the Quad Cities and Clive, Iowa have pleaded guilty to defrauding the Small Business Administration of more than 14-(m) million dollars in loans.
Michael Slater of Clive, Larry Henson and Andrew Erpelding, both of Davenport, and Susan McLaughlin of Bettendorf were accused of getting S-B-A loans for the now-defunct, Valley Bank, based in Moline, Illinois.
Court documents state the defendants — Michael Slater, 65, of Clive, Iowa, former President and Founder of Vital Financial; Larry Henson, 70, of Davenport, Iowa, former President and Chairman of Valley Bank; Andrew Erpelding, 43, also of Davenport, Iowa, former Vice President and Regional Manager of Valley Bank; and Susan McLaughlin, 68, of Bettendorf, Iowa, former Vice President for Credit Administration of Valley Bank — conspired to and did fraudulently obtain loan guarantees from the SBA on behalf of Valley Bank borrowers, knowing that the loans did not meet SBA’s guidelines and requirements for the guarantees.
Investigators say the defendants altered loan payment histories, renamed businesses, and hid the fact that borrowers had previously defaulted on loans. When the fraudulently guaranteed loans defaulted, the defendants caused the submission of reimbursement requests to the SBA to purchase the defaulted loans from investors and lending institutions, thereby shifting the majority of losses on the ineligible loans to the SBA.
The defendants attempted to obtain guarantees on over $14 million in loans, were successful in obtaining guarantees on over $9 million in loans, and caused the SBA losses of over $4.5 million.
All pleaded guilty to conspiracy to commit wire fraud, and face up to 30-years in prison.