Embezzlement, loan fraud and schemes to hide poor loan performance set the stage for the latest round of legal actions involving criminal allegations and prosecution against former bank officials.
Brian W. Harrison, a former loan officer for Farmer’s Bank and Trust in Great Bend, Kansas, pled guilty to one count of bank fraud on March 23. Sentencing is set for June 8.
Harrison is accused of making false statements to hide the poor performance of various loans that he made. Both parties have agreed to recommend a sentence of six months in prison, followed by six months home detention, as well as an order to pay more than $124,000 in restitution.
Candice L. White was indicted on March 26 by a federal grand jury in Denver on charges of embezzlement and willful misapplication of funds by a bank officer or employee, according to a news release issued by the Office of the Special Inspector General of Troubled Asset Relief Program. She allegedly embezzled more than $92,000 from the bank for her own personal use and for the use of others over about two years.
White faces 37 felony counts of embezzlement and willful misapplication of funds from a federally insured bank. If convicted on those counts, she faces not more than 30 years in federal prison and up to a $250,000 per count. She also faces two misdemeanor counts of embezzlement and willful misapplication of funds from a federally insured bank. If convicted on those counts, she faces not more than one year in federal prison and up to a $100,000 fine.
A March 12 Securities and Exchange Commission order has
Cynthia A. Sabol agreeing to pay a $55,000 civil money penalty. She also agreed not serve as an officer or director at a publicly traded company for the next five years and to generally not violate securities law in the future. Under the settlement, Sabol neither admitted nor denied the SEC’s allegations. A federal judge must approve the SEC settlement.
Sabol was a former chief financial officer for Commonwealth Bankshares Inc. She and two other former executives were charged with violating anti-fraud, reporting, internal control, and other federal securities laws. The SEC complaint alleged that the three were involved in efforts to hide the deterioration of the bank’s loan portfolio as well as making misleading statements to the public in the midst of the financial crisis.
A trial on federal wire fraud charges against David Weimert, a former long-time executive with Anchor Bank, began March 31. Prosecutors say he illegally benefited from a 2009 deal to sell a bank subsidiary’s interest in the Chandler Creek development in Austin, Texas.
A jury convicted Ebrahim Shabudin on March 25 of seven felony counts of conspiracy, securities fraud and other corporate fraud offenses stemming from the November 2009 failure of United Commercial Bank, according to a news release from the U.S. Attorney of the Northern District of California. Shabudin was the chief operating officer and chief credit officer at United Commercial in 2008 and 2009.
A jury found Shabudin guilty of conspiring with others within the bank to falsify key bank records as part of a scheme to conceal millions of dollars in losses and of falsely inflating the bank’s financial statements. The guilty verdict followed a six-week jury trial in California federal court. In all, Shabudin faces a total overall maximum term of 145 years of imprisonment, up to $16,750,700 in fines and assessments and up to 27 years of supervised release. A sentencing hearing is set for June 30. The fraud reportedly caused the ninth largest bank failure with estimated losses of $677 million.
A former senior vice president of Bank of America in Las Vegas, Justin Brough, pleaded guilty in federal court on Feb. 24 to a scheme that led to more than $6.4 million in losses on two BofA loans. A sentencing hearing is scheduled for May 28.
Brough provided financial services to high-net-worth clients. Brough was accused of falsifying documents over two business-related loans where the borrowers did not meet the bank’s underwriting requirements. Brough allegedly used bank funds to make payments when the borrowers had trouble keeping up with the loans and kept the payments under $10,000 so he would not need bank approval. Both borrowers ultimately defaulted on the loans.
The former president of Premier Community Bank pleaded guilty March 13 to charges stemming from a five-year scheme to defraud the bank. Michael “Sean” Davis faced federal charges of conspiracy to commit bank and mail fraud, money laundering, making false statements and fraudulently benefiting from a loan by a federally insured institution, according to a news release issued by the Office of the Special Inspector General for the Troubled Asset Relief Program. Davis solicited a straw buyer to submit false documents to purchase real properties via short sales from Bank of America. At Davis’ direction, the straw buyer then sold the properties the same day to third-party buyers. As a result of these loans, Davis received approximately $297,408 through a company he had set up. Sentencing is scheduled for May 28, 2015 in federal court in Florida.
The former head teller of the Lynrocten Credit Union in Lynchburg, Virginia, was sentenced on March 24 in the U.S. District Court for the Western District of Virginia in Lynchburg on federal embezzlement charges, according to a news release from the U.S. Attorney’s Office. Teresa Wieringo Humphries was sentenced to 40 months of federal incarceration. Humphries and another credit union employee were accused of carrying out a scheme to embezzle and steal funds from the credit union’s deposits. Humphries reportedly stole more than $1 million from the credit union.
Linda Sue Newcomb, the former manager of Lynrocten Credit Union, is scheduled to be sentenced for her role in the scheme on May 26 at the same federal court.
