LINDSAY'S FAMILY IN TROUBLE AGAIN

June 22, 2005, 2:50 AM EDT

CENTRAL ISLIP, N.Y. -- Lindsay Lohan's uncle was arrested Tuesday on charges that he fraudulently used a loan his company received under a federal program to aid a small business affected by the Sept. 11, 2001 terrorist attacks, authorities said.

Paul Sullivan, president and CEO of the Ropa Group Corp., applied for a $1.5 million loan from the U.S. Small Business Administration in July 2002, according to a criminal complaint.

The Ropa Group claimed to be the exclusive agent for the Hyundai Motor Co. to the United Nations; it also claimed to run a wine exporting company and other subsidieries, the complaint said.

Sullivan said in his application for the loan that the terrorist attacks had reduced orders from the United Nations and limited his company's participation in trade shows, according to the complaint.

The government then granted Ropa Group a loan of $646,900, specifying that $98,000 be used for working capital and $548,300 be used to pay off outstanding debts and liabilities, the complaint said. Checks were sent made out jointly to Ropa Group and several of its debtors.

Sullivan cashed checks in the amounts of $70,300, $80,000 and $61,300, but the company's debtors were never paid, the complaint said. The debtors' endorsements on the checks had been forged, it said.

Sullivan was arraigned Tuesday afternoon before E. Thomas Boyle in U.S. District Court in Central Islip and released on $250,000 bond, authorities said.

Sullivan denied the charges.

"Everything is fine," he told the New York Daily News for Wednesday editions. "It's a misunderstanding."