You may not be aware of it - in fact, chances are you never even heard of it - but we have this federal agency known as the Export-Import Bank of the United States (Ex-Im Bank). If you visit the Ex-Im Bank's website , you learn the following:
The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States. Ex-Im Bank's mission is to assist in financing the export of U.S. goods and services to international markets.
Ex-Im Bank enables U.S. companies - large and small - to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy.
Ex-Im Bank does not compete with private sector lenders but provides export financing products that fill gaps in trade financing. We assume credit and country risks that the private sector is unable or unwilling to accept. We also help to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters.
Ex-Im Bank provides working capital guarantees (pre-export financing); export credit insurance; and loan guarantees and direct loans (buyer financing). No transaction is too large or too small. On average, 85% of our transactions directly benefit U.S. small businesses.
With more than 77 years of experience, Ex-Im Bank has supported more than $456 billion of U.S. exports, primarily to developing markets worldwide.
Okay, so, what could be better than some independent federal agency handing out dollars, lots of dollars, to the private sector? Where do I sign up?
Frankly, that's likely what first caught the attention of an El Paso, Texas resident, Gilberto Baez-Garcia, 35, who was the co-owner of Valcomar Inc., an export company located in El Paso that was in the business of exporting U.S. manufactured goods to Mexico. Seems like Baez-Garcia thought that he had some kind of ATM machine at the Ex-Im Bank, where he could submit a loan application and the bank would simply spew out the bucks. Of course, our borrower might have figured that it would help things move along if he sort of fudged some of the numbers that the Ex-Im Bank might rely upon before cutting the checks. On the other hand, hey, what's a few extra zeros between friends?
According to federal prosecutors, Baez-Garcia and another El Paso exporter created false documents in order to obtain a fraudulent Ex-Im Bank loan, which resulted in a $1,016,126 loss to the government.
I'm not sure exactly how or why the light bulb went off, but Baez-Garcia may have realized that if the Ex-Im Bank didn't ask too many questions or make all that much effort to verify his financials, maybe, just maybe, the bank might be amenable to entering into a few more loans on that basis. Apparently, Baez-Garcia and some co-conspirators assisted others to obtain fraudulent Ex-Im loans, which resulted in more than $2 million in losses to the government.
Alas, as with so many fine plans, scams, and assorted fool-proof moneymaking ideas, this didn't ultimately end well. For starters, the Feds arrested Baez-Garcia on June 4, 2010, and on May 11, 2011, he pleaded guilty in the District Court in El Paso, TX, to conspiracy to commit wire and bank fraud; and conspiracy to launder money and bank fraud. As part of his plea, Baez-Garcia admitted to participating in a scheme to defraud the Ex-Im Bank of more than $3.6 million. Those millions in loans went into default, causing losses to the Ex-Im Bank.
Baez-Garcia was sentenced to 24 months in prision; five years of supervised release; ordered to pay $ 3,614,594 in restitution and $ 3,614,977 in forfeiture.