The small city of Ailey, Georgia has a population of 543, according to the U.S. Census Bureau. For many years, it only had two banks -- one in Ailey and one in Mount Vernon.
In 2012, residents were shocked to learn Aubrey Lee Price, the director of Montgomery Bank and Trust in Ailey, was accused of embezzling more than $20 million.
"We were all very upset about the situation, of course something like that happening in your backyard, literally your backyard," said Randy Rodgers, Superintendent of Montgomery County Schools.
Rodgers lives on the same street where the bank was located.
"I remember the day that the FDIC arrived, my wife and I actually sat chairs in the backyard and watched the guys coming and going," Rodgers said.
The FDIC shut the bank down.
Meanwhile, FBI agents spent two years searching for Price, whom authorities say had written letters admitting he had lost large sums of investors' money -- along with his plans to commit suicide.
A judge presumed Price dead, but the FBI did not. Last week, he was arrested after a traffic stop in Brunswick, GA.
"The last few days my email has been lighting up," said Rodgers.
Price's capture is now the talk of the town. Rodgers said he used to bank with Montgomery Bank and Trust, but has since closed his account.
"It was sad to see that many jobs lost. In fact, we are a very very small community, very little industrial development, and any jobs being lost are important," added Rodgers.
A few days after the bank closed, Ameris Bank opened at the same location, but that too closed last November.
Many of the residents who live in Ailey say they work in larger neighboring cities like Vidalia, which is only 10 miles away. Most do their banking there.
"I think there are a lot of people who would like to to see some closure to this," said Rodgers.
Price is expected to appear in Federal Court in Savannah for a bond heading Monday morning.
Showing posts with label Georgia. Show all posts
Showing posts with label Georgia. Show all posts
Sunday, January 12, 2014
Wednesday, January 1, 2014
Missing Georgia banker accused of embezzlement arrested in Brunswick traffic stop
A Georgia banker accused of embezzling more than $20 million who has been the subject of an FBI search since he went missing last summer was arrested Tuesday during a random traffic stop in Brunswick.
Aubrey Lee Price, 47, originally from Lyons, was indicted in July 2012 by a federal grand jury sitting in the Southern District of Georgia on a charge that he defrauded the Montgomery Bank & Trust in Ailey of more $21 million. He was arrested Tuesday by members of the Glynn County Sheriff’s Office conducting a random vehicle and traffic stop, said James Durham, first assistant United States attorney for the Southern District of Georgia.
According to the allegations in the indictment against Price, in 2010 an investment group he controlled invested approximately $10 million in the failing Montgomery Bank & Trust. Price was then made a director of MB&T and put in charge of investing the bank’s capital.
Over the next 18 months, Price is alleged to have stolen, misappropriated and embezzled more than $21 million from MB&T, Durham said. To cover up his fraud, Price provided MB&T officials with bogus account statements, which falsely indicated the bank’s capital was safely held in an account at a financial services firm, Durham said.
Before Tuesday’s arrest, Price was last seen in June 2012 boarding a ferry terminal in Key West, Fla., bound for Fort Myers. He disappeared after writing a letter to acquaintances and regulators stating that he had lost a large amount of money, and that he planned to take his own life. On Dec. 31, 2012 — exactly one year before his Tuesday arrest — a circuit court judge in Florida agreed to order a presumptive death certificate for Price at the request of his wife.
The FBI has been actively searching for Price since the date of his disappearance. He was arrested by Glynn County deputies on Interstate 95 in Brunswick. When deputies learned of Price’s true identity, he was taken into custody, Durham said.
Price will make his initial appearance on the federal arrest warrants on Jan. 2 at the federal courthouse in Brunswick.
In the Southern District of Georgia, Price is charged with one count of bank fraud, which carries a maximum sentence of 30 years in prison and a fine of up to $1 million. He faces additional charges in New York.
The indictment of Price arises out of an ongoing and joint investigation by FDIC-OIG special agent John Crawford, Federal Reserve Board OIG special agent Amy Whitcomb and FBI special Agent Ed Sutcliff. First Assistant United States Attorney James Durham and Assistant United States Attorney Brian Rafferty are prosecuting the case for the United States.
Aubrey Lee Price, 47, originally from Lyons, was indicted in July 2012 by a federal grand jury sitting in the Southern District of Georgia on a charge that he defrauded the Montgomery Bank & Trust in Ailey of more $21 million. He was arrested Tuesday by members of the Glynn County Sheriff’s Office conducting a random vehicle and traffic stop, said James Durham, first assistant United States attorney for the Southern District of Georgia.
According to the allegations in the indictment against Price, in 2010 an investment group he controlled invested approximately $10 million in the failing Montgomery Bank & Trust. Price was then made a director of MB&T and put in charge of investing the bank’s capital.
Over the next 18 months, Price is alleged to have stolen, misappropriated and embezzled more than $21 million from MB&T, Durham said. To cover up his fraud, Price provided MB&T officials with bogus account statements, which falsely indicated the bank’s capital was safely held in an account at a financial services firm, Durham said.
Before Tuesday’s arrest, Price was last seen in June 2012 boarding a ferry terminal in Key West, Fla., bound for Fort Myers. He disappeared after writing a letter to acquaintances and regulators stating that he had lost a large amount of money, and that he planned to take his own life. On Dec. 31, 2012 — exactly one year before his Tuesday arrest — a circuit court judge in Florida agreed to order a presumptive death certificate for Price at the request of his wife.
The FBI has been actively searching for Price since the date of his disappearance. He was arrested by Glynn County deputies on Interstate 95 in Brunswick. When deputies learned of Price’s true identity, he was taken into custody, Durham said.
Price will make his initial appearance on the federal arrest warrants on Jan. 2 at the federal courthouse in Brunswick.
In the Southern District of Georgia, Price is charged with one count of bank fraud, which carries a maximum sentence of 30 years in prison and a fine of up to $1 million. He faces additional charges in New York.
The indictment of Price arises out of an ongoing and joint investigation by FDIC-OIG special agent John Crawford, Federal Reserve Board OIG special agent Amy Whitcomb and FBI special Agent Ed Sutcliff. First Assistant United States Attorney James Durham and Assistant United States Attorney Brian Rafferty are prosecuting the case for the United States.
Thursday, June 20, 2013
Man Pleads Guilty to Conspiracy to Commit Bank Fraud Charge in Georgia
Michael J. Moore, United States Attorney for the Middle District of Georgia, announced that Gary Patton Hall, Jr., 47, of Tifton, Georgia, entered a plea of guilty today to conspiracy to commit bank fraud before the Honorable Hugh Lawson, Senior United States District Judge in Macon, Georgia.
In entering his plea of guilty, Mr. Hall admitted that from 2005 continuing through 2010, he committed bank fraud involving the Tifton Banking Company during his employment as President and CEO of the bank. Mr. Hall admitted that he conspired with others to obtain money, funds, credits, assets, securities, and other property of the Tifton Banking Company while carrying on a practice of replacing non-performing loans with new loans, including a Small Business Administration (SBA) guaranteed loan, to make the bank appear financially stronger than it was. The actions caused monetary losses to the bank and SBA of approximately $2.8 million. Mr. Hall continued these illegal activities even during the time that the bank applied for and received assistance from the Troubled Asset Relief Program (TARP), a government program established to help financial institutions during a financial crisis in an attempt to save the failing bank.
The plea agreement entered into by Mr. Hall and the United States Attorney calls for a sentence of 65 months in federal prison based upon an agreement as to what would be the appropriate calculations for determining sentence length under the federal sentencing guidelines. The decision as to whether or not to accept this recommendation will be made by the court at the time of sentencing. The maximum possible sentence under the law is 30 years’ imprisonment, a maximum fine of $1,000,000, or both; a term of supervised release of up to five years; and a mandatory assessment fee of $100. Sentencing is currently set for September 30, 2013.
In his plea, Gary Patton Hall Jr., 47, admitted that from 2005 through 2010, he conspired with others to get money, credit, assets, securities and other bank property while replacing nonperforming bank loans with new loans in an effort to make the bank appear financially stronger than it was.
In April 2009, Tifton received $3.8 million in federal taxpayer funds from the U.S. Department of the Treasury Troubled Asset Relief Program, or TARP.
In November 2010, the bank was closed by state and federal banking regulators. As of Sept. 30, 2010, the bank had operated one banking center and had total assets of $143.7 million and total deposits of $141.6 million, according to a Federal Deposit Insurance Corp. statement.
One particular loan, guaranteed by the Small Business Administration, caused monetary losses of approximately $2.8 to the bank and the SBA. The $3.8 million in TARP funds also was lost when the bank failed.
The plea agreement calls for Hall to serve 65 months in federal prison, based upon federal sentencing guidelines. The decision to accept this recommendation will be made by the court at the time of sentencing, according to a press statement. Sentencing is currently set for Sept. 30, 2013.
The announcement of Hall's guilty plea was made by Christy Romero, special inspector general for the Troubled Asset Relief Program, and Michael J. Moore, U.S. Attorney for the Middle District of Georgia. Assistant U.S. Attorney Robert D. McCullers is prosecuting the case on behalf of the federal government.
The case was investigated by the Federal Deposit Insurance Corporation, the Special Inspector General for TARP (SIG-TARP), the Federal Bureau of Investigation, the U.S. Small Business Administration, and the Tift County Sheriff’s Office. Assistant United States Attorney Robert D. McCullers is handling the prosecution for the Government.
In entering his plea of guilty, Mr. Hall admitted that from 2005 continuing through 2010, he committed bank fraud involving the Tifton Banking Company during his employment as President and CEO of the bank. Mr. Hall admitted that he conspired with others to obtain money, funds, credits, assets, securities, and other property of the Tifton Banking Company while carrying on a practice of replacing non-performing loans with new loans, including a Small Business Administration (SBA) guaranteed loan, to make the bank appear financially stronger than it was. The actions caused monetary losses to the bank and SBA of approximately $2.8 million. Mr. Hall continued these illegal activities even during the time that the bank applied for and received assistance from the Troubled Asset Relief Program (TARP), a government program established to help financial institutions during a financial crisis in an attempt to save the failing bank.
The plea agreement entered into by Mr. Hall and the United States Attorney calls for a sentence of 65 months in federal prison based upon an agreement as to what would be the appropriate calculations for determining sentence length under the federal sentencing guidelines. The decision as to whether or not to accept this recommendation will be made by the court at the time of sentencing. The maximum possible sentence under the law is 30 years’ imprisonment, a maximum fine of $1,000,000, or both; a term of supervised release of up to five years; and a mandatory assessment fee of $100. Sentencing is currently set for September 30, 2013.
In his plea, Gary Patton Hall Jr., 47, admitted that from 2005 through 2010, he conspired with others to get money, credit, assets, securities and other bank property while replacing nonperforming bank loans with new loans in an effort to make the bank appear financially stronger than it was.
In April 2009, Tifton received $3.8 million in federal taxpayer funds from the U.S. Department of the Treasury Troubled Asset Relief Program, or TARP.
In November 2010, the bank was closed by state and federal banking regulators. As of Sept. 30, 2010, the bank had operated one banking center and had total assets of $143.7 million and total deposits of $141.6 million, according to a Federal Deposit Insurance Corp. statement.
One particular loan, guaranteed by the Small Business Administration, caused monetary losses of approximately $2.8 to the bank and the SBA. The $3.8 million in TARP funds also was lost when the bank failed.
The plea agreement calls for Hall to serve 65 months in federal prison, based upon federal sentencing guidelines. The decision to accept this recommendation will be made by the court at the time of sentencing, according to a press statement. Sentencing is currently set for Sept. 30, 2013.
The announcement of Hall's guilty plea was made by Christy Romero, special inspector general for the Troubled Asset Relief Program, and Michael J. Moore, U.S. Attorney for the Middle District of Georgia. Assistant U.S. Attorney Robert D. McCullers is prosecuting the case on behalf of the federal government.
The case was investigated by the Federal Deposit Insurance Corporation, the Special Inspector General for TARP (SIG-TARP), the Federal Bureau of Investigation, the U.S. Small Business Administration, and the Tift County Sheriff’s Office. Assistant United States Attorney Robert D. McCullers is handling the prosecution for the Government.
Friday, April 26, 2013
Former Georgia bank teller sentenced in embezzlement
A former bank teller has been sentenced to four years in prison on identity theft and embezzlement charges.
U.S. Attorney Michael Moore, of the Middle District of Georgia, says 26-year-old Victoria Metz is also ordered to pay more than $79,300 in restitution to Colony Bank. Authorities say Metz worked as a bank teller in Leesburg — about 10 miles north of Albany — and cashed $79,361 worth of stolen checks from the Internal Revenue Service.
Metz told investigators she occasionally was given a cut of the proceeds from a third party who supplied her with the stolen checks.
Aside from prison time and restitution, Metz is ordered to serve three years of supervised release.
Tuesday, September 21, 2010
Georgia credit union teller pleads guilty to embezzling more than $624,000
A 48-year-old former head bank teller at MidSouth Community Federal Credit Union in Macon pleaded guilty to embezzlement and falsifying credit union records.Lisa R. Cox pleaded guilty in U.S. District Court on Monday to embezzling $624,608 from the credit union from 2001 to 2007 and using the money to gamble, take European vacations and make car payments, among other expenses.The Telegraph newspaper reports that prosecutors say Cox took money from teller drawers and the vault and made false entries to cover her tracks. A surprise audit in 2007 uncovered the deficit.Cox’s attorney, Catherine Leek, says she’s reserving her comments until sentencing, expected within 90 days.
Friday, May 7, 2010
Two Former Bank Executives and Hotel Developer Charged with Frauds Relating to the Collapse of $1 Billion Atlanta Bank
A federal judge in Atlanta unsealed an indictment today charging two former Atlanta-based Integrity Bank executives, Douglas Ballard, 40, and Joseph Todd Foster, 42, both of Atlanta, and hotel developer Guy Mitchell, 50, of Coral Gables, Fla., with various acts of conspiracy, bribery, bank fraud and/or securities fraud relating to over $80 million in loans that Mitchell obtained from Integrity Bank. Mitchell, Ballard and Foster were indicted by a federal grand jury on April 14, 2010, and Mitchell is expected to make his initial appearance before U.S. Magistrate Judge Gerrilyn Brill today. Arraignments are expected to be scheduled shortly in federal court in Atlanta for the three defendants. U.S. Attorney Sally Quillian Yates said, "We have charged two of Integrity Bank's former officers and its largest borrower with various acts of fraud, bribery, and insider trading. These officers of Integrity Bank sure weren't living up to the bank's name. After passing out $80 million to the developer like it was monopoly money, both officers dumped their Integrity stock before the failed loans came to light. While the developer was living the good life, even buying a private island with Integrity's money, and the bank's senior loan officer was making huge commissions and taking payoffs from the developer, the bank was dying a slow death. The defendants were going to leave the bank's shareholders and the FDIC holding the bag, but now they are being held accountable."
Jon T. Rymer, Inspector General, Federal Deposit Insurance Corporation, said, "The Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) is pleased to join the U.S. Attorney's Office for the Northern District of Georgia and our law enforcement colleagues in defending the integrity of the financial services industry. We are particularly concerned when senior bank officials, who are in positions of trust within their institutions, are alleged to be involved in unlawful activity. Prosecutions of individuals and entities involved in criminal misconduct help maintain the safety and soundness of the Nation's financial institutions."
IRS-Criminal Investigation Special Agent in Charge Reginael McDaniel said, "This indictment is an important victory for America's taxpayers who play by the rules and have no tolerance for those who make up their own rules. This investigation serves to remind us that there is no such thing as free money and there are no awards or incentives for creativity when it comes to crime."
According to U.S. Attorney Yates, the charges and other information presented in court: From 2004 to 2007, Mitchell and companies he controlled obtained more than $80 million in various supposed business loans from Integrity Bank, based in Atlanta. He allegedly obtained much of these funds under false pretenses, and deposited nearly $20 million of these business loans in a personal checking account, in which he made millions of dollars worth of personal luxury expenses and withdrew substantial amounts of cash. Among his personal expenses was over $1.5 million spent on a private island in the Bahamas.
While Mitchell was spending much of the loan proceeds on himself, the indictment alleges that he paid little, if any, of his money back to Integrity to satisfy interest payments. Rather, the indictment alleges that with the assistance of individuals within the bank, Mitchell paid interest on existing loans by taking draws or disbursements from other loans, and continually borrowed more and more money to keep paying the ever-increasing interest payments.
The indictment specifically focuses on three loans totaling approximately $20 million in 2006, which the indictment alleges were dispersed under false pretenses at the alleged approval and direction of Ballard, Integrity's former Executive Vice President. In one example charged in the indictment, Mitchell requested and Ballard helped disperse nearly $7 million out of a construction loan relating specifically to supposed construction and renovation at the "Casa Madrona," a luxury hotel owned by Mitchell in Sausalito, Calif. The indictment alleges that none of this money was used for construction, and in fact no renovations had occurred. Rather, most of the funds were wired directly to Mitchell's personal checking account, and used by him for personal purchases or cash, and the remainder was used to pay interest due on older Mitchell loans.
The indictment also alleges several acts of bribery. The indictment charges that Mitchell corruptly paid and Ballard corruptly received over $230,000 in a 9-month period – half in cash and half in a cashier's check – as a reward for Ballard's assistance in Mitchell's fraud. The indictment alleges that both men corruptly discussed other personal business opportunities That Ballard would receive for assisting Mitchell.
The indictment also alleges that Ballard evaded bank reporting requirements to avoid scrutiny of his cash deposits. And the indictment alleges That Ballard and his colleague, fellow bank Vice President Joseph Todd Foster, committed securities fraud by engaging in what is commonly referred to as "insider trading." Specifically, they allegedly sold nearly all of their shares of Integrity stock based on materially adverse secret information about the company – specifically relating to substantial problems with the loans to Mitchell – which they knew was not generally known to the public. The indictment charges that in essence they allegedly took advantage of secret inside information to sell stock that they knew to be overvalued, to others who did not share the same information.
The bank fraud and bribery charges against Mitchell and Ballard each carry a maximum sentence of 30 years in prison, the evasion of reporting requirements charges against Ballard carry a maximum of 10 years in prison, the securities fraud charges against Ballard and Foster carry a maximum of 20 years in prison and the conspiracy charge against Mitchell and Ballard carries a maximum of five years in prison. Each of the charges also carries a potential fine of up to $1 million.
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government's burden to prove the defendant's guilt beyond a reasonable doubt at trial.
President Barack Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
This case is being investigated by the FBI, the FDIC's Inspector General's Office, and the IRS, as part of President Barack Obama's Financial Fraud Enforcement Task Force.
Assistant U.S. Attorneys Justin S. Anand and Christopher C. Bly are prosecuting the case.
“Among the roots of our nation’s financial crisis were criminal acts by bank insiders and major borrowers that contributed to the failures or bailouts of financial institutions previously believed to be secure,” said U.S. Attorney Sally Quillian Yates. “Today we announce that two of these corrupt insiders here in Atlanta will be trading in their corporate offices for federal prison.”
“Those who line their pockets with profits of bank fraud schemes should know they will not go undetected and they will be held accountable,” said Internal Revenue Service (IRS)-Criminal Investigation Special Agent in Charge Reginael McDaniel. “IRS-Criminal Investigation is proud to be part of the law enforcement dragnet bringing these individuals to justice.”
According to U.S. Attorney Yates, the charges and other information presented in court: Ballard, Integrity Bank’s former executive vice president in charge of lending, admitted that he conspired with the bank’s major customer, co-defendant Guy Mitchell, to receive bribes from Mitchell and to assist Mitchell in receiving millions in loan draws under false pretenses. Ballard admitted in court to receiving over $200,000 in cash and other corrupt payments from Mitchell in exchange for Ballard’s assistance in distributing millions of loan draws. During this same time, Ballard caused Integrity Bank to distribute nearly $20 million in loan proceeds to Mitchell’s personal account, much of which was allegedly used for Mitchell’s personal consumption (including the purchase of a private island in the Bahamas). Mitchell requested and Ballard paid nearly $7 million of these draws out of a construction loan relating specifically to supposed construction and renovation at the “Casa Madrona,” a luxury hotel owned by Mitchell in Sausalito, Calif. The indictment alleges that none of this money was used for construction, and in fact no renovations had occurred.
Foster, Integrity’s former vice president in charge of risk management, pleaded guilty to charges that he committed securities fraud by way of what is commonly referred to as “insider trading.” Specifically, he admitted to having sold nearly all his shares of Integrity’s stock on the basis of material adverse information about the company of which Foster was aware by virtue of his inside position, but of which the public was generally unaware. Specifically, Foster dumped his shares of Integrity stock based on his knowledge that the bank was facing an increasingly substantial but undisclosed risk that its major customer, Mitchell, would default on over $80 million in outstanding loans.
Ballard was indicted in April 2010 on more than 20 counts of bank fraud, receipt of bribes, securities fraud, evasion of currency reporting requirements, and conspiracy. He pleaded guilty to conspiracy and one additional new count of tax evasion. He could receive a maximum sentence of up to 10 years in prison and a fine of up to $500,000. Foster, also indicted in April 2010, was indicted on two counts of securities fraud and today pleaded guilty to one count. He could receive up to 20 years in prison and a fine of up to $5 million. A date for sentencing has not yet been set before U.S. District Judge Julie E. Carnes.
This case is being investigated by Special Agents of the FBI, FDIC-Office of the Inspector General, and the IRS as part of President Barack Obama’s Financial Fraud Enforcement Task Force. The investigation remains ongoing as to other potential misconduct relating to the failure of this major Atlanta bank. Both defendants have agreed to cooperate in that ongoing investigation.
President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Jon T. Rymer, Inspector General, Federal Deposit Insurance Corporation, said, "The Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) is pleased to join the U.S. Attorney's Office for the Northern District of Georgia and our law enforcement colleagues in defending the integrity of the financial services industry. We are particularly concerned when senior bank officials, who are in positions of trust within their institutions, are alleged to be involved in unlawful activity. Prosecutions of individuals and entities involved in criminal misconduct help maintain the safety and soundness of the Nation's financial institutions."
IRS-Criminal Investigation Special Agent in Charge Reginael McDaniel said, "This indictment is an important victory for America's taxpayers who play by the rules and have no tolerance for those who make up their own rules. This investigation serves to remind us that there is no such thing as free money and there are no awards or incentives for creativity when it comes to crime."
According to U.S. Attorney Yates, the charges and other information presented in court: From 2004 to 2007, Mitchell and companies he controlled obtained more than $80 million in various supposed business loans from Integrity Bank, based in Atlanta. He allegedly obtained much of these funds under false pretenses, and deposited nearly $20 million of these business loans in a personal checking account, in which he made millions of dollars worth of personal luxury expenses and withdrew substantial amounts of cash. Among his personal expenses was over $1.5 million spent on a private island in the Bahamas.
While Mitchell was spending much of the loan proceeds on himself, the indictment alleges that he paid little, if any, of his money back to Integrity to satisfy interest payments. Rather, the indictment alleges that with the assistance of individuals within the bank, Mitchell paid interest on existing loans by taking draws or disbursements from other loans, and continually borrowed more and more money to keep paying the ever-increasing interest payments.
The indictment specifically focuses on three loans totaling approximately $20 million in 2006, which the indictment alleges were dispersed under false pretenses at the alleged approval and direction of Ballard, Integrity's former Executive Vice President. In one example charged in the indictment, Mitchell requested and Ballard helped disperse nearly $7 million out of a construction loan relating specifically to supposed construction and renovation at the "Casa Madrona," a luxury hotel owned by Mitchell in Sausalito, Calif. The indictment alleges that none of this money was used for construction, and in fact no renovations had occurred. Rather, most of the funds were wired directly to Mitchell's personal checking account, and used by him for personal purchases or cash, and the remainder was used to pay interest due on older Mitchell loans.
The indictment also alleges several acts of bribery. The indictment charges that Mitchell corruptly paid and Ballard corruptly received over $230,000 in a 9-month period – half in cash and half in a cashier's check – as a reward for Ballard's assistance in Mitchell's fraud. The indictment alleges that both men corruptly discussed other personal business opportunities That Ballard would receive for assisting Mitchell.
The indictment also alleges that Ballard evaded bank reporting requirements to avoid scrutiny of his cash deposits. And the indictment alleges That Ballard and his colleague, fellow bank Vice President Joseph Todd Foster, committed securities fraud by engaging in what is commonly referred to as "insider trading." Specifically, they allegedly sold nearly all of their shares of Integrity stock based on materially adverse secret information about the company – specifically relating to substantial problems with the loans to Mitchell – which they knew was not generally known to the public. The indictment charges that in essence they allegedly took advantage of secret inside information to sell stock that they knew to be overvalued, to others who did not share the same information.
The bank fraud and bribery charges against Mitchell and Ballard each carry a maximum sentence of 30 years in prison, the evasion of reporting requirements charges against Ballard carry a maximum of 10 years in prison, the securities fraud charges against Ballard and Foster carry a maximum of 20 years in prison and the conspiracy charge against Mitchell and Ballard carries a maximum of five years in prison. Each of the charges also carries a potential fine of up to $1 million.
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government's burden to prove the defendant's guilt beyond a reasonable doubt at trial.
President Barack Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
This case is being investigated by the FBI, the FDIC's Inspector General's Office, and the IRS, as part of President Barack Obama's Financial Fraud Enforcement Task Force.
Assistant U.S. Attorneys Justin S. Anand and Christopher C. Bly are prosecuting the case.
“Among the roots of our nation’s financial crisis were criminal acts by bank insiders and major borrowers that contributed to the failures or bailouts of financial institutions previously believed to be secure,” said U.S. Attorney Sally Quillian Yates. “Today we announce that two of these corrupt insiders here in Atlanta will be trading in their corporate offices for federal prison.”
“Those who line their pockets with profits of bank fraud schemes should know they will not go undetected and they will be held accountable,” said Internal Revenue Service (IRS)-Criminal Investigation Special Agent in Charge Reginael McDaniel. “IRS-Criminal Investigation is proud to be part of the law enforcement dragnet bringing these individuals to justice.”
According to U.S. Attorney Yates, the charges and other information presented in court: Ballard, Integrity Bank’s former executive vice president in charge of lending, admitted that he conspired with the bank’s major customer, co-defendant Guy Mitchell, to receive bribes from Mitchell and to assist Mitchell in receiving millions in loan draws under false pretenses. Ballard admitted in court to receiving over $200,000 in cash and other corrupt payments from Mitchell in exchange for Ballard’s assistance in distributing millions of loan draws. During this same time, Ballard caused Integrity Bank to distribute nearly $20 million in loan proceeds to Mitchell’s personal account, much of which was allegedly used for Mitchell’s personal consumption (including the purchase of a private island in the Bahamas). Mitchell requested and Ballard paid nearly $7 million of these draws out of a construction loan relating specifically to supposed construction and renovation at the “Casa Madrona,” a luxury hotel owned by Mitchell in Sausalito, Calif. The indictment alleges that none of this money was used for construction, and in fact no renovations had occurred.
Foster, Integrity’s former vice president in charge of risk management, pleaded guilty to charges that he committed securities fraud by way of what is commonly referred to as “insider trading.” Specifically, he admitted to having sold nearly all his shares of Integrity’s stock on the basis of material adverse information about the company of which Foster was aware by virtue of his inside position, but of which the public was generally unaware. Specifically, Foster dumped his shares of Integrity stock based on his knowledge that the bank was facing an increasingly substantial but undisclosed risk that its major customer, Mitchell, would default on over $80 million in outstanding loans.
Ballard was indicted in April 2010 on more than 20 counts of bank fraud, receipt of bribes, securities fraud, evasion of currency reporting requirements, and conspiracy. He pleaded guilty to conspiracy and one additional new count of tax evasion. He could receive a maximum sentence of up to 10 years in prison and a fine of up to $500,000. Foster, also indicted in April 2010, was indicted on two counts of securities fraud and today pleaded guilty to one count. He could receive up to 20 years in prison and a fine of up to $5 million. A date for sentencing has not yet been set before U.S. District Judge Julie E. Carnes.
This case is being investigated by Special Agents of the FBI, FDIC-Office of the Inspector General, and the IRS as part of President Barack Obama’s Financial Fraud Enforcement Task Force. The investigation remains ongoing as to other potential misconduct relating to the failure of this major Atlanta bank. Both defendants have agreed to cooperate in that ongoing investigation.
President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
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