Former bank worker charged in $8 million fraud and corruption scheme | USAO-NJ
NEWARK, NJ – A Morris County, New Jersey man has been indicted for his role in a conspiracy to extort millions of dollars from a bank, U.S. Attorney Philip R. Sellinger announced today.
Kurt Phelps, 53, of Flanders, New Jersey, is charged by indictment dismissed March 11, 2022, with one count of conspiracy to commit bank fraud and one count of bank bribery. Three of Phelps’ conspirators previously pleaded guilty to the fraudulent scheme.
According to documents filed in this case and statements made in court:
From 2013 to 2019, Phelps and his conspirators ran a scheme to defraud Phelps’ employer, a bank. They secured millions of dollars in bank credit for Starnet Business Solutions Inc. (Starnet), a now-defunct New Jersey-based printing company where the Phelps conspirators worked. Phelps’ conspirators paid him large cash bribes as part of the fraudulent 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, but repeatedly increased the line of credit. In 2018, the line of credit was worth around $8 million and Starnet failed to repay it.
Phelps knew that the financial information provided by Starnet to the bank for the line of credit was materially false and advised Starnet on how to defraud the bank. Phelps would review the draft financial information for Starnet and provide comments on how his conspirators should falsify the information before submitting it. Phelps also ensured 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 as part of the fraudulent scheme. The Phelps conspirators pooled money to pay for Phelps’ bribes. During the plot, Phelps accepted hundreds of thousands of dollars in bribes.
The charges of conspiracy to commit bank fraud and bank bribery each carry a potential maximum sentence of 30 years in prison and a fine of $1 million, or double the gross gain or loss of the offense. whichever is higher.
U.S. Attorney Sellinger credited FBI Special Agents, under Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation that led to the indictment.
The government is represented by Assistant U.S. Attorney Heather Suchorsky from the
Economic Crimes Unit.
The charges and allegations contained in the indictment are only allegations and the accused is presumed innocent until proven guilty.