Frank Hamilton, 55, of Simi Valley, California, was sentenced on Mar. 18 to 66 months in prison for his role in a loan fraud conspiracy that defrauded banks and the Small Business Administration out of millions of dollars, according to United States Attorney David Metcalf. The sentence also includes two years of supervised release and restitution totaling $6,093,024.90. United States District Judge Wendy Beetlestone handed down the sentence after Hamilton pleaded guilty to one count of wire fraud conspiracy affecting a financial institution.
The case highlights ongoing efforts by federal authorities to address fraudulent activity targeting government-backed loan programs. Prosecutors said Hamilton and his co-conspirators submitted false applications for various loans before and during the COVID-19 pandemic, including SBA 7(a) loans, Economic Injury Disaster Loans (EIDLs), and Paycheck Protection Program (PPP) loans.
According to court filings and admissions by Hamilton, he advised others on how to submit fraudulent loan applications and helped generate fake documents such as tax returns. He also assisted in obtaining so-called "shelf companies"—businesses registered but not actually operating—to make it appear applicants had established businesses eligible for funding. Hamilton further helped open bank accounts and set up websites for these non-functioning companies.
Hamilton sometimes joined phone interviews with lenders alongside his conspirators and used their names or company names in multiple applications to lend legitimacy to the scheme. In addition to helping others secure fraudulent loans, he applied for loans himself using both minimally functioning companies he owned as well as shelf companies under his control.
The conspirators collectively applied for about $9 million in loans, with approximately $7 million ultimately funded. Most proceeds were turned over to Hamilton under the pretense that he would invest them and return enough money for loan payments plus a small personal sum; however, many participants did not receive repayments as promised. Authorities said most of the money was kept by Hamilton himself.
As a result of these actions, most loans went into default with losses exceeding $7 million for the Small Business Administration. The investigation involved several agencies including the SBA Office of Inspector General, FBI, IRS Criminal Investigation Division, Homeland Security Investigations, and Immigration and Customs Enforcement.
