Photo by bloomsberries / Flickr
Photo by bloomsberries / Flickr

A loan broker for the now-defunct La Jolla Bank pleaded guilty in federal court Thursday to making false statements in relation to an investigation into bribes paid to the bank’s vice president and a Small Business Administration lending department manager.

Jocelyn Brown, 60, is scheduled to be sentenced July 19.

The defendant admitted that she paid cash bribes in return for the banker’s assurance that the loans Brown referred would be approved and funded, and, therefore, that Brown’s commissions would be paid.

Brown collected tens of thousands of dollars in referral fees from La Jolla Bank, and kicked back a portion to the bank manager, in cash, every time she was paid, according to her guilty plea.

La Jolla Bank was a bank and financial services company that provided consumer, business and construction loans. It opened its SBA lending department in 2005. In February 2010, the bank failed and was taken over by the FDIC. At the time of its failure, the bank had outstanding debt of more than $1 billion, which the FDIC absorbed, and ultimately passed on to taxpayers.

According to the plea agreement, Brown worked as an unofficial broker for La Jolla Bank, referring business loan customers to the bank’s SBA department. As part of this job, Brown helped her borrowers compile their loan application packages and submit them to the bank. In return for generating business, La Jolla Bank paid Brown a commission or referral fee, calculated as a percentage of each loan she referred.

Brown admitted that in 2006, SBA lending department manager Amalia Martinez asked her to kick back a portion of her commissions, in cash, after her clients’ loans were funded.

In turn, Martinez would make sure that Brown’s clients’ loans were approved so that Brown could collect commission payments, regardless of the soundness of the loans and their benefit to the bank. In addition, Martinez arranged to pay Brown a fraudulent $30,000 “commission” for a loan she in fact had no part in brokering. Brown went so far as to generate a fake invoice, pretending that she had earned the commission.

Brown admitted that she lied to law enforcement agents by concealing the bribe payments and hiding her relationship with Martinez. During the investigation, Brown told federal agents, falsely, that she never saw Martinez accept money in exchange for loans.

In her plea agreement, Brown acknowledged that her false statements significantly impeded the investigation of Martinez.

Martinez pleaded guilty to accepting bribes and admitted that she and other senior La Jolla Bank executives accepted hundreds of thousands of dollars in cash bribes and kickbacks from borrowers in return for issuing hundreds of millions of dollars in loans.

The bank management issued the loans knowing that the borrowers were unqualified and unlikely to repay, and their mismanagement contributed to the bank’s billion-dollar collapse.

Two others have been charged in related cases.

SBA borrower Annand Sliuman pleaded guilty and admitted paying cash bribes to Martinez in return for several SBA loans he was issued between 2006 and 2008. By 2008, Sliuman was not financially qualified to borrow money, so he submitted fraudulent documents as part of his loan application that made his businesses appear to be financially sound.

Sliuman’s assistant, Laura Ortuondo, pleaded guilty to making false statements to investigators about her involvement in the case.

–City News Service