Two Brokers, One Bank Loan-Officer Charged With Bank / Loan Fraud

Two Brokers, One Bank Loan-Officer Charged With Bank /Loan Fraud

Three Massachusetts men were charged last week in connection with a scheme to defraud the U.S. Small Business Administration (SBA) and a Massachusetts bank.

Joseph Masci, Ted Capodilupo, and Brian Ferris, all from the greater Boston area, were charged with one count each of conspiracy to commit bank fraud.

The charging documents show, that between 2015 and 2018, the three men agreed to defraud the Mass-based bank and the SBA by submitting fraudulent loan applications.

The documents allege that Masci and Capodilupo, both loan brokers, submitted numerous fraudulent applications to the bank on behalf of borrowers who were ineligible for the loans.

The duo is alleged to have charged the ineligible borrowers fees to construct and submit the fraudulent documents.

But for the frauds to be successful, they needed the bank to push the loan approvals.

That’s where Mr. Ferris came in.

Ferris, a loan officer, and bank insider is alleged to have received kickbacks from Capodilupo and Masci for getting the loans approved, perhaps even if the borrowers had little-to-no means of paying them back.

A Boston trio of bank fraud.

The alleged fraud generated roughly $270,000 in fees and may have left the bank and SBA on the hook for millions, with loans to unqualified borrowers.

Each of the men faces up to 30 years in prison, plus five years of supervised release and a fine of up to $1 million, or twice the gross gain or loss associated with the fraud.

Loan fraud has been on the rise, especially those loans associated with the SBA.

In fact, the Small Business Administration’s watchdog has received over 1 million fraud referrals for disaster loans associated with COVID-19, alone.

These bank frauds and all others, especially those committed or assisted by bank insiders, could potentially be largely averted, should institutions update anti-fraud systems with modern technology.

New anti-fraud systems, powered by artificial intelligence, could save banks and taxpayers tens, perhaps hundreds of millions in fraud losses. However, many banks, credit unions and other financial institutions continue to rely on outdated, insufficient security protocols and systems. Many of which were designed in the 1980’s and are still in use today.

But artificial intelligence can change it all.

You see, while insiders may have access and incentive to push fraudulent loans through the system and can make obvious red-flag paperwork look legitimate, artificial intelligence can spot the discrepancies almost instantly.

Modern AI systems, like those from ToolCASE, can collect and decipher millions of data-points, from thousands of sources on prospective borrowers, and almost instantly rate them on a risk scale that needs little to no human intervention.

AI helps flag unqualified borrowers regardless of any lack-of, or additional inputs by human loan officers.

Because of this, AI helps to eliminate insider bank loan and mortgage fraud by removing or reducing the temptation of “greed” in loan officers.

In the case of the Boston trio, it took years to discover what AI could have potentially found in moments, as the paperwork was being submitted.

Read more about the Boston trio bank fraud, HERE

Or discover how ToolCASE could have potentially prevented them from ever committing crimes in the first place, HERE


Source: https://www.justice.gov/usao-ma/pr/two-loan-brokers-and-one-bank-loan-officer-charged-bank-fraud-scheme

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