U.S. Department of Justice

United States Attorney
Eastern District of New York

Friday, September 23, 2011

Owner of International Clothing Retailer Sentenced to Four Years in Prison for Bank Fraud

Bank Leumi Losses Total Approximately $5.8 Million

BROOKLYN, N.Y. – Kwong Hung Lam, also known as “Eric Lam,” the president and sole owner of New Century Enterprise Inc., an importer and distributor of casual apparel headquartered in Farmingdale, N.Y., was sentenced today to four years in prison for making false statements to a financial institution and ordered to pay $6,035,457 in restitution.  U.S. District Judge Nicholas G. Garaufis imposed the sentence pursuant to Lam’s Oct. 21, 2010, guilty plea.

The sentence was announced by Loretta E. Lynch, U.S. Attorney for the Eastern District of New York, and Janice K. Fedarcyk, Assistant Director-in-Charge of the FBI’s New York Field Office.

According to his plea allocution and documents filed by the government in the case, in 2006, Lam, on behalf of New Century, entered into a written credit line loan agreement with Bank Leumi USA, under which the bank agreed to extend funds and other financial accommodations, such as letters of credit, to New Century on a discretionary basis.  As part of the loan agreement, New Century was required to provide Bank Leumi, on a monthly basis, with a borrowing base certificate, which certified the value of New Century’s inventory and accounts receivable, the collateral for the loan.  Between 2006 and 2009, Lam submitted numerous false borrowing base certificates to Bank Leumi in which he falsely inflated the true value of New Century’s collateral for the loan.  As of September 2009, Lam, who had personally guaranteed the loan, and New Century owed Bank Leumi $5.8 million, and Lam had certified that the value of New Century’s collateral was approximately $9 million.

In October 2009, Lam terminated New Century’s business operations, and thereafter authorized Bank Leumi to take possession of all New Century’s inventory and accounts receivable.  Upon inspection of the collateral for the loan, however, Bank Leumi discovered that New Century’s inventory and accounts receivable were worth far less than Lam had represented in September 2009.  In fact, the inventory was valued at far less than $100,000, and the accounts receivable balance was falsified and therefore uncollectible.

U.S. Attorney Lynch expressed her grateful appreciation to the FBI, the agency that led the government’s investigation.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency task force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The Task Force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.  For more information about the task force visit: www.stopfraud.gov.

The government’s case was prosecuted by Assistant U.S. Attorney James G. McGovern.

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GENERAL INFORMATION
Financial Fraud Enforcement Task Force

 Leadership
Eric Holder, Attorney General, Chair
Michael Bresnick, Executive Director
 
 Contact
(202) 514-2000
Recursos Para Víctimas de Fraude
What is Financial Fraud?
What is Financial Fraud?

Financial Fraud encompasses a wide range of illegal behavior - from mortgage scams to Ponzi schemes, credit card theft to tax fraud. Everyone is affected by financial fraud.