Two Arizona Businessmen Sentenced to Prison for Loan Fraud

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in handcuffsLast week, owners of a medical equipment manufacturer and distributor in Phoenix plead guilty and were sentenced to prison for defrauding the Small Business Administration (SBA) and two Arizona banks. According to a statement released by the US Department of Justice (DOJ), the now defunct company, called Global Medical Equipment of Arizona, defrauded the SBA and the two regional banks by submitting falsified loan applications. This included lying about the purpose of loans (instead using the money to pay off pre-existing debts), sending forged emails and letters indicating that they had made down payments on loans, and concealing a kickback.

“These loans should have been granted to qualified small business owners. Instead, the defendants effectively denied an opportunity to legitimate small businesses deserving access to capital,” said Elizabeth A. Strange, First Assistant U.S. Attorney for the District of Arizona. “The United States Attorney’s Office will continue to aggressively investigate and seek criminal prosecution or civil remedies when fraud is perpetrated by corrupt borrowers who attempt to obtain financial assistance through the SBA’s guaranteed loan programs.”

According to the DOJ statement, company owners Harold Halman II, 58, and  Alexander Schaap, 62, were sentenced to 36 and 30 months in prison, respectively. Each must serve three years of supervised release after their prison terms. An associate, Craighton Boats, 44, was not sentenced to prison, but to five years of probation.  

“SBA’s 7(a) program is intended to provide capital to grow the nation’s small businesses, not line one’s pockets,” said Acting Inspector General Hannibal “Mike” Ware. “Schemes to unjustly enrich oneself will be rooted out, and those responsible will be brought to justice.”

In the DOJ statement, Michael DeLeon, Special Agent in Charge of the Phoenix Field Office, said that the three businessmen took $6 million in fraudulent loans, of which they defaulted on nearly $4.5 million. So the Court has also ordered that they pay $4.5 million in restitution.

The investigation was led by the SBA’s Office of Inspector General, the IRS-Criminal Investigation Division and the FBI. The prosecution was handled by Kevin M. Rapp, Assistant United States Attorney, District of Arizona, Phoenix.

Last modified: April 24, 2018

Category: Business Lending


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