Colorado Springs man convicted of bank fraud

 

Date: January 17, 2020

Contact: newsroom@ci.irs.gov

DENVER – Jack V. Smalley of Colorado Springs was found guilty following a four-day jury trial for bank fraud related to a mortgage application with the Navy Federal Credit Union.

On June 25, 2015, Smalley submitted a mortgage loan application with the Navy Federal Credit Union indicating that he earned a salary of approximately $200,000 dollars a year. At the time, Smalley knew that wasn't true. In conducting its due diligence, the Navy Federal Credit Union requested a pay stub that would show Smalley's monthly income, a letter from his employer to verify his employment and salary, and a bank statement to show Smalley's income deposited into his bank account.

Smalley took steps to falsify the requested information, including falsifying a pay stub and his employment letter. Based on the fraudulent documents, the Navy Federal Credit Union approved Smalley for a $998,000 loan. Smalley defaulted on that loan in 2017.  In trying to mitigate his loan, Smalley provided two more fraudulent employment letters in 2018 and 2019.  Smalley used the proceeds of the loan to purchase a $1.1 million dollar residence in Colorado Springs.  As part of the proceedings in this case, the Court ruled that the residence is subject to forfeiture based on the bank fraud.

Smalley is scheduled to be sentenced on April 27, 2020.  The case was investigated by the Internal Revenue Service—Criminal Investigations, the Department of Defense Office of the Inspector General, and Air Force Office of Criminal Investigations. The trial was before U.S. District Court Judge Daniel D. Domenico. The defendant was prosecuted by Assistant U.S. Attorney Jeremy Sibert.