33 Charged in Small-Business Loan Fraud

Federal prosecutors Wednesday charged 33 people with conspiring to obtain more than $35 million in small-business loans from New York banks through a middleman who reportedly bragged that he could get a loan for a homeless person.

The defendants--owners of small businesses, most legitimate and some fictitious--are accused of falsifying business records and tax returns to make it appear their businesses were credit-worthy when in fact they were floundering, prosecutors said. The cases were filed in federal court in New York.

One of those charged is a part-time Chippendale’s dancer.

The biggest victim was Citigroup Inc.’s Citibank unit. Others included Chase Manhattan Corp., Bank of New York and Fleet Bank. The defendants sought $35 million from 1995 to 1998 and were loaned $20 million, the charges said. The banks lost $10 million to $15 million when the defendants defaulted, prosecutors said.

The middleman was Gary Confredo, 36, who posed as an independent financial consultant and helped clients apply for the loans in exchange for a 5% to 15% cut, prosecutors said.

Confredo, who was once a loan officer at NatWest Bank, pleaded guilty to bank fraud in February and is in jail awaiting sentencing. He could face up to 21 years and 10 months in prison.