poprockcrusher
Banned
Small business loans may be Wall Street’s new cesspool.
A suit filed yesterday in New Jersey federal court alleges that TD Bank and franchise distributor Matco Tools were complicit in underwriting hundreds of fraudulent small business loans over a four-year period dating back to 2003.
In their suit, David Villano III and his father, David Villano, Jr., claim that Matco, a subsidiary of publicly traded Danaher Corp., and TD Bank established a scheme to dupe “unsophisticated borrowers” into signing loans that were destined to fail.
The suit alleges that Matco doled out inflated annual performance projections to Cherry Hill, N.J.-based lender Commerce Bank, which was acquired by TD four years ago, in order to get a Small Business Administration loan approved.
Matco Tools franchisees allege they were victims of a financial fraud involving the company, a unit of Danaher Corp, and its lender, Commerce Bank.
Alamy
Matco Tools franchisees allege they were victims of a financial fraud involving the company, a unit of Danaher Corp, and its lender, Commerce Bank.
“Matco’s upper management . . . devised a scheme to secretly make income projections to TD and other SBA lenders that would only be disclosed to the SBA lender,” in order to satisfy the bank’s lending criteria, the suit alleges.
Matco established the system to grow its franchise business, and Commerce Bank officials rubber-stamped the SBA loans because it allowed the bank to collect interest on the doomed debt until it eventually imploded, the suit claims.
The bank turned a blind eye to the inflated projections, according to the suit, because SBA loans are guaranteed by the government with as much as 90 percent of the losses covered.
Loans to Matco franchisees had an unusually high default rate of 37 percent at the time that one of the plaintiffs’ loans was underwritten in 2004, according to the suit.
“It’s unfortunate that SBA loans, which are designed to assist aspiring entrepreneurs and benefit the economy generally, could be used for such deceitful purposes,” said Jerry Marks, an attorney at Marks & Klein representing the Villanos.
A spokeswoman for TD declined to comment, and a Danaher representative could not be reached.
[email protected]
Read more: http://www.nypost.com/p/news/business/td_bank_tool_case_LFdZzYpQKpxieyeMSf6OMP#ixzz1Y1gCiHhf
A suit filed yesterday in New Jersey federal court alleges that TD Bank and franchise distributor Matco Tools were complicit in underwriting hundreds of fraudulent small business loans over a four-year period dating back to 2003.
In their suit, David Villano III and his father, David Villano, Jr., claim that Matco, a subsidiary of publicly traded Danaher Corp., and TD Bank established a scheme to dupe “unsophisticated borrowers” into signing loans that were destined to fail.
The suit alleges that Matco doled out inflated annual performance projections to Cherry Hill, N.J.-based lender Commerce Bank, which was acquired by TD four years ago, in order to get a Small Business Administration loan approved.
Matco Tools franchisees allege they were victims of a financial fraud involving the company, a unit of Danaher Corp, and its lender, Commerce Bank.
Alamy
Matco Tools franchisees allege they were victims of a financial fraud involving the company, a unit of Danaher Corp, and its lender, Commerce Bank.
“Matco’s upper management . . . devised a scheme to secretly make income projections to TD and other SBA lenders that would only be disclosed to the SBA lender,” in order to satisfy the bank’s lending criteria, the suit alleges.
Matco established the system to grow its franchise business, and Commerce Bank officials rubber-stamped the SBA loans because it allowed the bank to collect interest on the doomed debt until it eventually imploded, the suit claims.
The bank turned a blind eye to the inflated projections, according to the suit, because SBA loans are guaranteed by the government with as much as 90 percent of the losses covered.
Loans to Matco franchisees had an unusually high default rate of 37 percent at the time that one of the plaintiffs’ loans was underwritten in 2004, according to the suit.
“It’s unfortunate that SBA loans, which are designed to assist aspiring entrepreneurs and benefit the economy generally, could be used for such deceitful purposes,” said Jerry Marks, an attorney at Marks & Klein representing the Villanos.
A spokeswoman for TD declined to comment, and a Danaher representative could not be reached.
[email protected]
Read more: http://www.nypost.com/p/news/business/td_bank_tool_case_LFdZzYpQKpxieyeMSf6OMP#ixzz1Y1gCiHhf
