The United States Attorney for the Western District of Missouri, Tammy Dickinson, announced that the former vice president of a Pulaski County Bank was sentenced to three years in prison without parole for his role in a conspiracy to defraud the U.S. Small Business Administration (SBA) of $4.1 million and also for taking part in a separate and unrelated scheme to defraud the federal government of $18.2 million.
Richard Newman Delong, 51, of Newburg, MO, who served as an executive vice president and chief lending officer of Mid-America Bank in Dixon, was handed a three-year prison sentence by U.S. District Judge Brian C. Wimes for leading a scheme to defraud SBA and will also serve a concurrent term of two years in connection to another scheme to defraud the Federal Housing Administration (FHA).
From January 2005 to February 2010, Delong led a conspiracy to defraud the SBA by obtaining loans for several co-conspirators while he was working at Mid-America Bank. These loans were insured by the SBA and designed to provide financial assistance to qualified small businesses.
According to court documents, Delong conspired with others to prepare false paperwork that were submitted to the SBA in order to obtain loan guarantees. He then facilitated the loan approvals for the businesses, most of which were ineligible for the SBA’s financing assistance.
Delong took steps in concealing past due loan payments of distressed borrowers; making loans to nominee borrowers; making false entries in bank records; structuring loans so as to avoid the scrutiny of the bank’s board of directors; concealing false letters of credit; diverting SBA guaranteed loan proceeds to themselves and others; misapplying loan proceeds; preparing fraudulent SBA borrower applications; and paying and accepting bribe money to secure loans, according to prosecutors.
Ultimately, at least seven of the SBA-guaranteed loans went into default as a result of Delong’s actions , leading to loan losses of $2,939,161 for Mid-America Bank, and another $1,675,000 for Chubb Insurance which were the payments made to Mid-America Bank upon a claim on a policy it maintained.
In January 2014, Delong pleaded guilty to charges of conspiracy in connection to his role in the scheme to defraud the SBA.
Other co-defendants that pleaded guilty and have been sentenced in this case include two business consultants (George G. Spencer and Dennis K. Depriest); the former branch manager of the SBA office in Springfield, Mo. (Larry Steven Aduddle); several business owners (Gerald E. Harris, Michael Edward Clegg, Perris D. Rask, Keith David Miller, and Lindell L. Vawter); and nominee loan borrowers (Andrea M. Clegg, Daniel J. Metz, James David Boothe, Catherine S. Debar, Randall S. Rogers, James Stewart Dunlop, Jr., and Scott E. Alexander).
Delong was still in custody and awaiting bond on the SBA fraud charges when in December 2015, he made another guilty plea to charges in connection to his role in a separate and unrelated case of possessing and uttering a forged security as part of another scheme to defraud the FHA.
Delong and co-defendant James J. Laughlin, 74, of Waynesville, Mo., each pleaded guilty to their roles in an $18.2 million fraud scheme.
Laughlin, one of the operators of 4-J Apartments in Pulaski County, Mo., admitted that he provided false information to the Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) in order to obtain an $18,219,400 loan in 2012 for the operation and maintenance of 232 apartments and complexes in Pulaski County.
Laughlin collaborated with Delong, who at this time was an employee of Brookshire Concrete, while on bond awaiting his sentencing in the SBA fraud conspiracy. Delong altered the company’s records to make it seem as if Brookshire Concrete were renting 4-J apartments for its employees. These alterations made occupancy levels at 4-J apartments to be falsely inflated in order to qualify for the FHA loan.
To cover up their scheme, Delong issued several checks payable to 4-J apartments as rent from Brookshire Concrete, when in fact, none of Brookshire’s employee lived at the apartments, and the checks contained the forged signature of the company’s owner.
In addition to the prison sentences, Delong was also ordered to pay $4,222,916 in restitution $1,193,893 to the Small Business Administration (SBA); $1,257,327 to Mid-America Bank and Trust Company; $1,674,696 to Chubb Insurance and $98,000 to Brookshire Concrete.
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