Owner of Non-Profit Sentenced in Loan Fraud Scheme

Allison Tussey —  October 4, 2010 — Leave a comment

Linda Brusco, a/k/a “Linda Karl” and “Linda Giordano,” 48, Philadelphia, Pennsylvania, was sentenced to 37 months in prison for running a small business loan fraud scheme. Brusco pleaded guilty March 13, 2009, to one count of mail fraud and 27 counts of false statements pertaining to loans. Brusco owned and operated a non-profit organization called Partners for Small Business Development (“Partners“), located in King of Prussia and then in Philadelphia. “Partners” provided assistance to small businesses, in particular, to receive small business loans from various banks. The defendant used “Partners” to steal more than $650,000 from banks and borrowers.

In addition to the prison term, U.S. District Court Judge Mary McLaughlin ordered Brusco to pay restitution in the amount of $866,000 and a special assessment of $2,800. She must also complete five years’ of supervised release following the prison term.

Among the services offered, defendant Brusco established a micro-loan fund with a consortium of participating banks. A micro-loan was a loan usually under $30,000. Through this fund, small businesses were shepherded through the loan process with “Partners‘” assistance. The consortium of banks would approve the loans and then each bank paid a pro-rata share on the loans. The borrowers deposited money into the “Partners” bank account for loan payments to the banks. Brusco withdrew the money for her personal use. The defendant also stole money from the banks by submitting fraudulent loan applications using her clients’ information without their knowledge or consent. Through these schemes, defendant Brusco is alleged to have stolen approximately $664,543.94 from the banks and borrowers.

United States Attorney Zane David Memeger announced the sentencing.

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Jim Pavlock.

 

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Allison Tussey

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