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Thursday, October 21, 2010

Mooresville, North Carolina banker charged with falsifying $1M in loans

A Mooresville community banker has pleaded guilty to giving herself more than $1 million in loans by falsifying loan applications with the names of straw borrowers, according to a plea agreement filed Monday by the U.S. Attorney's Office.Karen Floyd made at least 11 loans to herself worth $1.08 million while she was an executive at Southern Community Bank, according to court records. The loans were made between March 2006 and November 2009.A straw loan is made when the person whose name is on the loan application is not the person who will actually benefit from or pay back the loan. Straw borrowers may or may not know that their names have been used in connection with a loan. The U.S. Attorney's Office didn't say if any of the straw borrowers in the Floyd case knew that their names were being used. It did say Floyd was aided "by others known and unknown to the United States Attorney."Floyd's attorney, Charlotte lawyer Eben Rawls, did not return calls for comment.According to the charge, Floyd, 49, "caused payments to be made" on the straw loans. Authorities didn't specify how the false loans were detected, although in many cases, straw loans are discovered after the death of a person listed as a straw borrower. The FBI, the Federal Deposit Insurance Corp. and the Office of the N.C. Commissioner of Banks are also involved in the investigation.Floyd is charged with one count of "theft/embezzlement/misapplication by (a) bank officer," a charge that carries up to 30 years in prison and up to $1 million in fines. As part of the plea agreement, Floyd agreed to forfeit any property that authorities want to seize to repay the loans. She cannot work again at any bank that is FDIC insured. If jailed, she must participate in the Bureau of Prisons Inmate Financial Responsibility Program.The U.S. Attorney's Office didn't say how Floyd had spent the money. Property records list her as an owner of a house in Salisbury worth $458,000 and a house in Vass worth $106,000.
Since the summer, there have been several charges against former Charlotte-area bankers accused of stealing from their companies or their clients. They range from a former Bank of America branch manager charged with accepting bribes worth $38,000 to a former Wachovia distribution executive who pleaded guilty to embezzling more than $11 million from the bank by falsifying contractor invoices.Floyd became Southern Community's Lake Norman regional executive around August 2006, leading the bank's push into the Charlotte area and working on business development, branch management and retail lending. Before joining Southern Community, she worked at Wachovia and SunTrust, according to the bank's 2006 annual report."Karen is an excellent fit for a leader in the booming Charlotte-Statesville corridor," the bank said at the time.As a regional executive, Floyd served as the bank's face at various community events. Last year, she represented Southern Community at a statewide meeting of the N.C. Center for Nonprofits, according to meeting records, and made an appearance when the bank donated to the local YMCA following the opening of a Mooresville branch.Southern Community's president did not return calls for comment.Southern Community Bank, based in Winston-Salem, is. like many small banks, struggling with troubled loans and low demand for new loans. In the second quarter, the bank lost $371,000 for common shareholders.The bank has 22 branches, mostly in the western half of North Carolina, and about 300 employees, according to the company website. Its motto is "Small Enough to Care." Staff researcher Maria David contributed.

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