Former Student Finance Corp CEO Gets 5 Years in Prison for Loan Fraud

Former Student Finance Corp CEO Gets 5 Years in Prison for Loan Fraud
Published 12 February 09 03:38 PM

The former head of bankrupt Student Finance Corp. has been convicted of fraud — his second fraud conviction in two years — after he was found guilty of lying on loan documents used to secure a $25 million line of credit for the student loan company and to obtain $7 million in personal loans, reports The Delaware County Daily Times (“Radnor Businessman Gets 5 Years for Fraud,” Feb. 9, 2009).

According to David Weiss, acting U.S. attorney for the District of Delaware, former student loan executive Andrew Yao also fraudulently obtained millions of dollars in bank loans to purchase a private plane worth $4 million and to refinance his $3 million vacation home in Nantucket, Mass.

Yao has been sentenced to five years in prison and has been ordered to pay $12.5 million in restitution, Weiss said. In 2007, Yao was convicted of bankruptcy fraud after lying about giving almost $700,000 to his mistress, former Playboy centerfold Alexandria Karlsen Wolfe, and about gambling away $150,000 at two Las Vegas casinos.

In his most recent fraud conviction, Yao pleaded guilty to seven counts of making false statements to a financial institution, and one count each of mail fraud, wire fraud and engaging in an illegal monetary transaction. In addition, Yao is subject to criminal forfeiture of $1 million.

As part of the loan scheme, Yao hired an accountant to prepare fraudulent personal tax returns for himself and his corporation from the early 1990s up through 2002. These tax returns were different than the actual returns filed with the IRS, Weiss said, and in many cases, the returns overstated Yao’s income by several million dollars.

“The sentence imposed on Mr. Yao sends an important message to all those who would think about attacking our financial system through fraud,” Weiss said. “His false statements led to the loss of millions of dollars by financial institutions, losses that affected those institutions, their employees, their shareholders and the public.”