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 concerns about abuse of government-backed loan programs designed to support businesses, especially during the COVID-19 pandemic. Authorities say such schemes undermine public trust and divert resources from legitimate businesses in need.
According to court filings and Hamilton’s own admissions, he and his co-conspirators began filing fraudulent applications for SBA 7(a) loans before the pandemic. As the pandemic unfolded, they shifted their focus to Economic Injury Disaster Loans (EIDLs) funded by the SBA and Paycheck Protection Program (PPP) loans funded by banks but fully guaranteed by the SBA. PPP loans were intended to help businesses retain employees during economic disruptions caused by the pandemic.
Hamilton advised others on how to submit false loan applications and helped generate fake documents such as tax returns. He also assisted conspirators in obtaining so-called “shelf companies”—businesses registered but not actually operating—to make it appear as though applicants had established companies eligible for loans. In addition, Hamilton helped open bank accounts and set up websites for these non-functioning companies, sometimes joining phone interviews with lenders to further legitimize their applications.
He also applied for fraudulent loans himself using minimally functioning or shelf companies he owned. In total, conspirators sought approximately $9 million in loans through these schemes; about $7 million was actually 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 co-conspirators did not receive repayments as promised while Hamilton kept most funds for himself.
As a result of this scheme, most loans went into default with more than $7 million in losses reported by the Small Business Administration. The investigation involved multiple agencies including the Small Business Administration Office of Inspector General, FBI, IRS Criminal Investigation Division, Homeland Security Investigations, and Immigration and Customs Enforcement.
