Fraud trial begins for five former directors, employees at Westfield financial firm

A federal fraud trial involving several former officers and employees of a now-defunct financial services firm in Westfield began on Monday.

The defendants are Kerri Agee of Noblesville, the co-founder and former president and CEO of Banc-Serv Partners LLP, along with co-founder Matthew Smith of Westfield; former Chief Operating Officer Kelly Isley of Westfield; former Chief Marketing Officer Chad Griffin of Carmel; and former relationship manager Nicole Smith of Indianapolis.

Agee and Matthew Smith were married when they founded Banc-Serv in 2002. Smith left the company in 2005, and the two are no longer married.

Matthew Smith was also a managing director at an Illinois-based lending institution that worked with Banc-Serve to originate Small Business Administration loans.

All five were indicted in March 2019 over what federal prosecutors describe as a 13-year-long conspiracy to defraud the SBA. Banc-Serv provided consultation and outsourcing services for small-business lenders who made SBA loans, and prosecutors say the defendants committed fraud by securing guarantees for loans that the SBA had previously deemed as ineligible.

According to the indictment, between 2004 and 2017 the defendants and several co-conspirators originated dozens of loans totaling more than $10 million that were ineligible for SBA guarantees.

They did so, the indictment alleges, to generate additional fee revenue for Banc-Serv, and to avoid having to indemnify the lenders, secondary-market investors or the SBA for having originated and sold loans that later went into default.

The five are facing a joint charge of conspiracy to commit wire fraud against a financial institution. Agee, Isley and Nicole Smith are also each facing two charges of wire fraud against a financial institution. All five were originally indicted on additional charges that have since been dismissed.

Indiana Southern District Court Chief Judge Tanya Walton Pratt is presiding over the trial, which is taking place at the federal courthouse in downtown Indianapolis.

The first few hours of the trial Monday were taken up with jury selection, which will winnow the pool of 51 potential jurors to a panel of 12 jurors and two alternates.

The case could involve testimony from up to 36 potential witnesses, Pratt said, and the trial could take up to 10 days to complete.

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