The SBA and the $620 million Alabama One Credit Union were among the victims of check kiting and other fraudulent activities allegedly committed by Danny Ray Butler, a businessman and real estate developer.
According to a statement from U.S. Attorney Joyce White and FBI Special Agent in Charge Richard D. Schwein Jr., in Birmingham, Ala., Butler allegedly engaged in a check-kiting scheme that led to a $1.275 million loss at the $620 million Alabama One CU in Tuscaloosa, Ala., after defrauding the SBA of $1.76 million through a loan to build a grocery store. He was charged with making false statements connected to schemes to defraud financial institutions and the SBA.
In 2010, Butler contacted West Alabama Bank and Trust in for a $5 million loan to build the grocery store, according to the indictment. He received bank approval for half the amount of the loan with the SBA agreeing to finance 35% of the project and Butler providing the remaining 15%. However, after construction was completed, Butler defaulted on the bank and SBA loans.
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