Menu Home

Ex-Banker pleads to $8 million in bank fraud and bribery

Department of Justice

U.S. Attorney’s Office

District of New Jersey


FOR IMMEDIATE RELEASE

Thursday, June 2, 2022

Former Bank Employee Admits $8 Million Fraud and Bribery Scheme

NEWARK, N.J. – A Morris County, New Jersey, man today admitted conspiring to commit bank fraud and accepting bribes, U.S. Attorney Philip R. Sellinger announced.

Kurt Phelps, 53, of Flanders, New Jersey, pleaded guilty by videoconference before U.S. District Judge Kevin McNulty to an indictment charging him with one count of conspiracy to commit bank fraud and one count of bank bribery. Three of Phelps’ conspirators previously pleaded guilty in connection with the fraud scheme.    

According to documents filed in this case and statements made in court:

From 2013 through 2019, Phelps and his conspirators carried out a scheme to defraud Phelps’ employer, a bank. They obtained millions of dollars of credit from the bank for Starnet Business Solutions Inc. a now defunct New Jersey-based printing company where Phelps’ conspirators worked. Phelps’ conspirators paid him large cash bribes in connection with the fraud scheme

In 2013, Starnet received a line of credit from the bank after providing materially false financial information. The bank not only allowed Starnet to maintain the line of credit, at various times it increased the line of credit. By 2018, the line of credit was worth approximately $8 million, and Starnet has not repaid it

Phelps was aware that financial information Starnet provided to the bank for the line of credit was materially false, and coached Starnet on how to defraud the bank. Phelps would review draft financial information for Starnet and provide feedback on how his conspirators should falsify the information before submission. Phelps also worked to ensure that the bank did not detect the fraud scheme by helping Starnet avoid audits and other quality control measures employed by the bank. 

Phelps solicited large cash bribes – tens of thousands of dollars at a time – from Starnet in connection with the fraud scheme. Phelps’ conspirators pooled cash to pay Phelps bribe payments. Over the course of the conspiracy, Phelps accepted hundreds of thousands of dollars in cash bribes. 

The conspiracy to commit bank fraud and bank bribery charges each carry a maximum potential penalty of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense, whichever is greatest. Sentencing is scheduled for Oct. 3, 2022.

U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Acting Special Agent in Charge Michael Messenger in Newark, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Heather Suchorsky of the Economic Crimes Unit.

Link:

DOJ Press Release

Indictment

Categories: Anti-Corruption Bank Fraud Bribery Department of Justice (DOJ) Updates Fraud Indictments and Arrests

eric9to5

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: