Guilty plea entered in scheme that defrauded MD bank, sparked losses of $3.5 million

A bank fraud that resulted in losses of more than $3.5 million to a Maryland bank was admitted to by a New Jersey man late last week as a result of an investigation that included the Federal Deposit Insurance Corp. (FDIC).

The U.S. Attorney for the District of Maryland said Mehul Khatiwala, 37, of Voorhees, N.J., pleaded guilty April 25 to conspiracy to commit bank fraud and to three counts of bank fraud in connection with an elaborate scheme to fraudulently obtain loans from Cecil Bank of Elkton, Md., to purchase hotels and a multifamily residential property. The federal authorities said the scheme resulted in the $3.5 million loss to the bank.

More specifically, according to a release from the U.S. Attorney’s office, Khatiwala and co-conspirators submitted false statements and fraudulent documentation in order to obtain more than $15 million in loans from Cecil Bank, much of which was guaranteed by the Small Business Administration (SBA). U.S. Attorney Robert K. Hur said that the defendants “used deceit to steal millions of dollars from the victims, which ended up including not only the bank but the American taxpayers.  Federal law enforcement are committed to prosecuting and deterring this type of costly fraud.”

Khatiwala’s plea agreement stated that, from February 2011 through January 2014, Khatiwala and two co-conspirators executed a scheme to defraud Cecil Bank, the SBA, and other financial institutions by misrepresenting material facts in order to obtain financing for the purchase of two hotels and a multifamily residential property. The U.S. Attorney alleges that the defendant defaulted on the loans, causing losses to the bank and the SBA.

New Jersey Man Pleads Guilty to Federal Charges for $3.5 Million Bank Fraud Scheme