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CFO of Berlin, New Hampshire Business Sentenced in Multi-Million Dollar Bank Fraud Case

October 17, 2016 / Source: FDIC Office of Inspector General

October 13, 2016

The Office of the United States Attorney for the District of Vermont stated that Steven D. Griffin, 59, of Berlin, New Hampshire, was sentenced by Chief Judge Christina Reiss yesterday based on his conviction for making a false statement to a financial institution. Chief Judge Reiss sentenced Griffin to 24 months of home confinement as part of a five-year term of supervised release. The court also sentenced Griffin to pay $500,000 in restitution.

As part of the sentencing, Griffin admitted to submitting or causing to be submitted inflated figures for assets of Isaacson Structural Steel, Inc., including inventory, to Passumpsic Savings Bank, and other banks participating in loans totaling over $12 million, including a $2 million loan guaranteed by the Small Business Administration in late 2010. Griffin was part owner and Vice President and CFO of ISSI, which before its bankruptcy was one of the largest businesses in the North Country. ISSI fabricated steel used in commercial construction. It entered into construction contracts to provide not only the steel for commercial buildings but also to provide subcontractor services, principally the erection of the steel. ISSI purchased steel and fabricated the various pieces of steel needed for each contract at its Berlin, New Hampshire location and then shipped the steel to building sites. Early last year, ISSI’s CEO Arnold Hanson pleaded guilty to conspiring to submit false financial statements. Sentencing for Hanson is scheduled for November 23, 2016.

According to court records, between August 2007 and April 2011, ISSI officers regularly submitted false and inflated figures to the banks regarding the value of ISSI’s assets. ISSI submitted these false statements about assets in borrowing base certificates and financial statements. ISSI regularly inflated its assets by a million dollars or more. For example, in August 2007, ISSI officers discussed, and then submitted to the bank, inflated figures for the amount of money owed to ISSI for work done in connection with 303 Third St., a construction project in Boston. In early 2011, officers participated in the submission of ISSI’s draft financial statement for the financial year 2010, which contained significant overstatements about ISSI’s inventory. That financial statement had an inventory representation of approximately $12 million dollars. In fact, the value of the inventory was less than $2 million. Inventory was thus inflated by over $10 million. In April 2011, the banks learned about issues with ISSI’s inventory figures. By June 2011, ISSI was in bankruptcy, and its assets were later liquidated. In the end, the banks lost millions of dollars as a result of the fraud.

At the sentencing hearing, Griffin asked the Court to sentence him below the advisory sentencing guideline range of 51 to 63 months in jail in light of his community service and severe physical illnesses. Chief Judge Reiss agreed that in light of a variety of factors, including Griffin’s health, a jail sentence should not be imposed. The Court imposed a limit on Griffin’s freedom by imposing a lengthy period of home confinement.

The United States is represented in this matter by Assistant U.S. Attorneys Paul Van de Graaf and Timothy Doherty. Hanson is represented by George Ostler, Esq. The investigation, which is ongoing, is being conducted by the Federal Bureau of Investigation, the Office of Inspector General for the Federal Deposit Insurance Corp., and the Office of Inspector for the Small Business Administration.