Donald Terry Dubose, a/k/a Terry Dubose, 65, of Panama City Beach, Florida; Elwood Ladon West, a/k/a Woody West, 39 of Monroeville, Alabama; and Frank Alfred Baker, 61, of Marianna, Florida, have been charged for their roles in a fraud scheme involving the Federal Deposit Insurance Corporation’s (FDIC) Temporary Liquidity Guarantee Program (TLGP), announced U.S. Attorney Pamela C. Marsh for the Northern District of Florida. The TLGP was created at the height of the 2008 financial crisis in order to encourage lending but, according to the allegations, was misused by the defendants to shield themselves and their institution from financial losses.
The defendants were indicted by a federal grand jury with one count of conspiracy to commit wire fraud against the FDIC, seven counts of wire fraud, three counts of making false statements to the FDIC, and one count of aiding and abetting a false claim against the United States. A sealed indictment was returned by a federal grand jury on July 9, 2013, and unsealed today.
The indictment alleges that Coastal Community Investments (Coastal) was a bank-holding company that owned Coastal Community Bank, based in Panama City Beach, Florida, and Bayside Savings Bank, based in Port St. Joe, Florida. Coastal Community Bank and Bayside Savings Bank both failed on July 30, 2010. Dubose was the Chairman and Chief Executive Officer of Coastal and the second largest Coastal shareholder. West was the Chief Financial Officer of Coastal and a Coastal shareholder. Baker was an attorney for Coastal and Coastal’s largest shareholder.
The fraud alleged in the indictment involved the TLGP, which was created at the height of the financial crisis in October 2008. The purpose of the TLGP was to encourage banks to begin lending to one another again and, thereby, help stabilize the economy. To do this, the TLGP provided that the FDIC would guarantee a loan made by one financial institution (the “lender”) to another financial institution (the “borrower”) in an amount up to 125 percent of the borrower’s existing senior unsecured debt (outstanding-unsecured debt), thus assuring repayment to the lender by the borrower or, in the event of default, by the FDIC.
The indictment further alleges that, in October 2008, Coastal had a $3 million loan with RBC Bank (USA), which was secured by 100 percent of the stock of Coastal Community Bank and Bayside Savings Bank (the RBC Loan). At that time, the RBC Loan was in default, thus giving RBC the ability to exercise its right to take the pledged stock and potentially rendering defendants’ shares in Coastal worthless. Under pressure from RBC to repay this debt, the indictment alleges that the defendants falsely certified to the FDIC that the RBC Loan was unsecured, knowing that it was secured, so that Coastal could get an FDIC guaranteed loan under the TLGP.
The indictment further alleges that Coastal obtained a $3,750,000 (125 percent of the RBC Loan) loan from central Florida-based CenterState Bank, which—based on the defendants’ misrepresentations—was guaranteed by the FDIC under the TLGP (the TLGP Loan). Coastal used the proceeds of the TLGP Loan to repay the RBC Loan. In June 2010, Coastal defaulted on the TLGP Loan, and, on August 7, 2010, CenterState Bank filed a claim with the FDIC for payment of the full amount due on the TLGP Loan, plus interest. The FDIC paid CenterState’s claim on August 13, 2010 by wiring $3,805,833.34 in principal and interest from the FDIC to CenterState.
Finally, the indictment alleges that Dubose, desiring to avoid losses to himself and his family as Coastal’s financial condition deteriorated, fraudulently sold and converted Coastal stock owned by him and his family members to unwitting investors by misrepresenting the nature of the stock, by misrepresenting Coastal’s financial condition, and by providing loans from Coastal Community Bank to finance the purchases of Coastal stock.
Defendants are scheduled for to appear in federal court for their initial appearance and arraignment on August 8, 2013 at 1:30 p.m. at the U.S. District Courthouse in Panama City, Fla.
The defendants face a maximum of 30 years in prison for each count of conspiracy to commit wire fraud and wire fraud and a maximum of five years in prison for making false statements to the FDIC and aiding and abetting CenterState Bank in making a false claim against the United States.
This indictment results from an extensive investigation by agents of the Federal Reserve Board-Office of the Inspector General, FBI, FDIC, and Office of the Special Inspector General for the Troubled Asset Relief Program. The case is being prosecuted by Assistant U.S. Attorney Gayle Littleton.
An indictment is merely an allegation by a grand jury that a defendant has committed a violation of federal criminal law and is not evidence of guilt. All defendants are presumed innocent and entitled to a fair trial, during which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Thursday, August 8, 2013
Tuesday, August 6, 2013
Officers at failed Wilmette, Illinois bank charged with fraud
Four former directors and officers of a failed Wilmette bank have been charged with defrauding the U.S. government, including using $6.8 million from the bank-bailout program to keep their alleged criminal enterprise running.
It’s the first time that a TARP bank has been charged with running a criminal enterprise, according to the governing body for the Troubled Asset Relief Program, or TARP. Records show other banks that received bailout money have previously been charged with fraud.
Zulfikar Esmail, 70, of Evanston, the bank’s former chairman, was among those formally arraigned today in Cook County Criminal Court for his role in the alleged scheme at $269 million-asset Premier Bank, which failed in March 2012.
The Federal Deposit Insurance Corp. estimated that its failure would cost the fund – which is financed by other banks -- $64 million. In January 2009, Premier received $6.8 million from the U.S. Treasury Department’s Troubled Asset Relief Program, which was supposed to go to only healthy banks. Among other things, the indictment said that the bank misrepresented its financial condition to regulators, making Treasury believe that it was healthier than it was.
Illinois Attorney General Lisa Madigan said Esmail engaged in a “criminal shakedown scheme, soliciting and demanding bribes in connection with applications made for business loans and lines of credit” to open and operate several Michael’s Fresh Market grocery stores in Chicago and the suburbs. The lawsuit, filed by the state of Illinois, alleges that Esmail demanded that his children be given ownership stakes in the stores in exchange for the loans.
Charges against Esmail include financial institution fraud, theft by deception, commercial bribery of a financial institution, and conspiracy to commit a financial crime. He faces a mandatory prison sentence for theft by deception and being organizer of a financial crimes enterprise, which each carry a mandatory prison sentence of six to 30 years. His remaining charges are punishable by four to 15 years.
Other defendants are Shamim Esmail, 65, of Evanston; Robert McCarty, 51, of Geneva; and William Brannin, 53, of Chicago. Charges against them include continuing a financial crimes enterprise and conspiracy to commit a financial crime, each punishable by four to 15 years in prison. They also face charges of theft by deception, which has a mandatory prison sentence of six to 30 years.
The Esmails have been released on a collective $500,000 bond, according to Illinois attorney general Lisa Madigan. McCarty was released on a $400,000 bond and Brannin on a $350,000 bond.
The four have separate lawyers.
“Shamim is not guilty of the charges in the indictment,” said her lawyer, Mark Rotert, of Stetler Duffy & Rotert in Chicago. “We intend to demonstrate that at trial and look forward to clearing her name.”
Attorneys for Brannin and Esmail also said their clients were innocent.
“If criminal cases were proved in press releases, the attorney general would be a champion, but they’re not,” said Chris Gair, the lawyer for Zulfikar Esmail, referring to Madigan's written statement.
The former chairman of failed Premier Bank in Wilmette, along with his wife and two other defendants, have been indicted in Cook County Criminal Court on fraud charges in what was described as the first case in the country accusing former bank officers and directors of running a "criminal enterprise" to defraud the federal bank bailout program.
Dr. Zulfikar Esmail, 70, of Evanston, a medical doctor who launched the bank in 2000, is charged with financial institution fraud and being the organizer of a financial crimes enterprise, according to the indictment, brought by Illinois Attorney General Lisa Madigan's office. If convicted, he faces mandatory jail time of six to 30 years.
Also charged were his wife Shamim Esmail, 65, and two board members: Robert McCarty, 51, of Geneva, and William Brannin, 53, of Chicago. They each face two sets of charges, one that would mandate prison time of six to 30 years and the other that would mean possible prison time of four to 15 years.
(Read the indictment at the end of this story.)
The four were arrested at their homes last month and released after posting bonds.
At his arraignment today, Dr. Esmail pleaded innocent, said his attorney, Chris Gair.
"There is no evidence of wrongdoing by Dr. Esmail and this is overreaching by the Illinois attorney general's office. We're going to be looking forward to establishing Dr. Esmail's innocence," Mr. Gair said.
Ms. Esmail's attorney, Mark Rotert, said "She isn't guilty of the charges in the indictment. She intends to defend herself and we're looking forward to clearing her name."
The Esmails were accused of defrauding the Treasury Department out of $6.8 million in bailout funds issued under the Troubled Asset Relief Program (TARP). In addition to the lost taxpayer funds, when Premier Bank failed last year, it cost the Federal Deposit Insurance Corp.'s insurance fund an estimated $64.1 million.
According to the indictment, the Esmails engineered a scheme to “shake down” one of the bank's biggest borrowers, requiring that he hand over equity interests in some of his projects to the Esmails' grown children as a condition for obtaining loans to expand.
George Dernis, former owner of the Michael's Fresh Market chain of grocery stores, had made similar allegations in a civil lawsuit he brought last year against the Esmails.
The indictment also accused the Esmails of concealing the condition of the bank from state banking regulators by, among other things, lending money to borrowers to buy out the failing projects of other borrowers. That enabled the bank not to have to disclose certain loans as delinquent on its quarterly reports of its financial condition.
Mr. Esmail also allegedly improperly charged the bank for construction work done on his home and some rental properties he owned, according to the indictment.
“Esmail, the former chairman of TARP recipient Premier Bank, stands charged of orchestrating a criminal enterprise by using Premier Bank as his personal fiefdom and of exploiting TARP to finance an alleged long-running criminal enterprise while fattening his own pockets at the expense of customers and federal taxpayers,” said Christy Romero, special inspector general for TARP, in a release.
In the release, Ms. Madigan said the defendants used “taxpayer funds to further their own shakedown scheme at a time when our country was on the brink of disaster.”
Also participating in the investigation was the FDIC's Office of Inspector General.
Attorneys for the other two defendants didn't respond to requests for comment.
INDICTMENT:
http://www.scribd.com/doc/158521827/Premier-Bank-Indictment
It’s the first time that a TARP bank has been charged with running a criminal enterprise, according to the governing body for the Troubled Asset Relief Program, or TARP. Records show other banks that received bailout money have previously been charged with fraud.
Zulfikar Esmail, 70, of Evanston, the bank’s former chairman, was among those formally arraigned today in Cook County Criminal Court for his role in the alleged scheme at $269 million-asset Premier Bank, which failed in March 2012.
The Federal Deposit Insurance Corp. estimated that its failure would cost the fund – which is financed by other banks -- $64 million. In January 2009, Premier received $6.8 million from the U.S. Treasury Department’s Troubled Asset Relief Program, which was supposed to go to only healthy banks. Among other things, the indictment said that the bank misrepresented its financial condition to regulators, making Treasury believe that it was healthier than it was.
Illinois Attorney General Lisa Madigan said Esmail engaged in a “criminal shakedown scheme, soliciting and demanding bribes in connection with applications made for business loans and lines of credit” to open and operate several Michael’s Fresh Market grocery stores in Chicago and the suburbs. The lawsuit, filed by the state of Illinois, alleges that Esmail demanded that his children be given ownership stakes in the stores in exchange for the loans.
Charges against Esmail include financial institution fraud, theft by deception, commercial bribery of a financial institution, and conspiracy to commit a financial crime. He faces a mandatory prison sentence for theft by deception and being organizer of a financial crimes enterprise, which each carry a mandatory prison sentence of six to 30 years. His remaining charges are punishable by four to 15 years.
Other defendants are Shamim Esmail, 65, of Evanston; Robert McCarty, 51, of Geneva; and William Brannin, 53, of Chicago. Charges against them include continuing a financial crimes enterprise and conspiracy to commit a financial crime, each punishable by four to 15 years in prison. They also face charges of theft by deception, which has a mandatory prison sentence of six to 30 years.
The Esmails have been released on a collective $500,000 bond, according to Illinois attorney general Lisa Madigan. McCarty was released on a $400,000 bond and Brannin on a $350,000 bond.
The four have separate lawyers.
“Shamim is not guilty of the charges in the indictment,” said her lawyer, Mark Rotert, of Stetler Duffy & Rotert in Chicago. “We intend to demonstrate that at trial and look forward to clearing her name.”
Attorneys for Brannin and Esmail also said their clients were innocent.
“If criminal cases were proved in press releases, the attorney general would be a champion, but they’re not,” said Chris Gair, the lawyer for Zulfikar Esmail, referring to Madigan's written statement.
The former chairman of failed Premier Bank in Wilmette, along with his wife and two other defendants, have been indicted in Cook County Criminal Court on fraud charges in what was described as the first case in the country accusing former bank officers and directors of running a "criminal enterprise" to defraud the federal bank bailout program.
Dr. Zulfikar Esmail, 70, of Evanston, a medical doctor who launched the bank in 2000, is charged with financial institution fraud and being the organizer of a financial crimes enterprise, according to the indictment, brought by Illinois Attorney General Lisa Madigan's office. If convicted, he faces mandatory jail time of six to 30 years.
Also charged were his wife Shamim Esmail, 65, and two board members: Robert McCarty, 51, of Geneva, and William Brannin, 53, of Chicago. They each face two sets of charges, one that would mandate prison time of six to 30 years and the other that would mean possible prison time of four to 15 years.
(Read the indictment at the end of this story.)
The four were arrested at their homes last month and released after posting bonds.
At his arraignment today, Dr. Esmail pleaded innocent, said his attorney, Chris Gair.
"There is no evidence of wrongdoing by Dr. Esmail and this is overreaching by the Illinois attorney general's office. We're going to be looking forward to establishing Dr. Esmail's innocence," Mr. Gair said.
Ms. Esmail's attorney, Mark Rotert, said "She isn't guilty of the charges in the indictment. She intends to defend herself and we're looking forward to clearing her name."
The Esmails were accused of defrauding the Treasury Department out of $6.8 million in bailout funds issued under the Troubled Asset Relief Program (TARP). In addition to the lost taxpayer funds, when Premier Bank failed last year, it cost the Federal Deposit Insurance Corp.'s insurance fund an estimated $64.1 million.
According to the indictment, the Esmails engineered a scheme to “shake down” one of the bank's biggest borrowers, requiring that he hand over equity interests in some of his projects to the Esmails' grown children as a condition for obtaining loans to expand.
George Dernis, former owner of the Michael's Fresh Market chain of grocery stores, had made similar allegations in a civil lawsuit he brought last year against the Esmails.
The indictment also accused the Esmails of concealing the condition of the bank from state banking regulators by, among other things, lending money to borrowers to buy out the failing projects of other borrowers. That enabled the bank not to have to disclose certain loans as delinquent on its quarterly reports of its financial condition.
Mr. Esmail also allegedly improperly charged the bank for construction work done on his home and some rental properties he owned, according to the indictment.
“Esmail, the former chairman of TARP recipient Premier Bank, stands charged of orchestrating a criminal enterprise by using Premier Bank as his personal fiefdom and of exploiting TARP to finance an alleged long-running criminal enterprise while fattening his own pockets at the expense of customers and federal taxpayers,” said Christy Romero, special inspector general for TARP, in a release.
In the release, Ms. Madigan said the defendants used “taxpayer funds to further their own shakedown scheme at a time when our country was on the brink of disaster.”
Also participating in the investigation was the FDIC's Office of Inspector General.
Attorneys for the other two defendants didn't respond to requests for comment.
INDICTMENT:
http://www.scribd.com/doc/158521827/Premier-Bank-Indictment
One Bank's Scooter Stuart Thought He Knew Who Blew the Whistle in Arkansas
FROM http://www.arkansasbusiness.com/
Before he died on March 26, Layton “Scooter” Stuart told Arkansas Business that he thought he knew who had stirred up trouble for him with the chief federal regulators of his One Bank & Trust: Michael Heald and Tom Ricciardone.
In August 2011, Stuart had fired Heald as One Bank’s executive vice president and chief operating officer and terminated the bank’s business relationship with Thinc Marketing Group, where Ricciardone was president.
According to Stuart, Heald told him: “I know where every skeleton is, and we’ll ruin your lives.”
After the Office of the Comptroller of the Currency forced the board of directors to oust Stuart from the bank last Sept. 28, Stuart said he received a text message from Ricciardone that started with “I told you we would get you” and ended with a particularly nasty expletive.
Federal agents have since revealed that three anonymous notes were sent to the OCC’s Little Rock field office, the first received on March 14, 2012. The three communications concerned questionable bank loans and fund transfers linked with two Little Rock houses owned by Stuart’s son and daughter.
Those notes prompted OCC scrutiny that exploded into a sweeping forensic audit of One Bank and a multi-agency criminal investigation led by the Internal Revenue Service.
No criminal charges have been made against anyone in connection with the One Bank investigation.
Heald didn’t return messages seeking comment, and Ricciardone declined comment. There is no evidence besides Stuart’s suspicions to link the two to the anonymous notes.
If they did alert the OCC, their actions might be filed in a drawer labeled: Law of unintended consequences.
Heald and Ricciardone were drawn deeply into a chain reaction of terminations and investigations when the scope of federal curiosity extended far beyond Stuart’s alleged self-dealing with One Bank funds to finance his children’s homes. Though unnamed, the two appear to be part of the narrative in the U.S. Attorney’s forfeiture complaint filed July 12 against Stuart’s estate.
Sources familiar with the investigation identify Heald as “former Employee C” in the complaint. Those same sources identify Ricciardone as “the owner of the marketing company” that allegedly overbilled One Bank by $1 million between January 2009 and August 2011.
According to the forfeiture complaint, “the owner of the marketing company eventually agreed to pay $550,000 restitution to the bank, and this agreement also ended the marketing company’s business relationship with the bank.”
The restitution was made through a $550,000 One Bank loan to “the owner of the marketing company” that was guaranteed by the owner’s father-in-law, according to the complaint. Ricciardone’s father-in-law is Little Rock attorney Richard A. Williams.
The $550,000, however, was allegedly redirected by Stuart into an account for his personal use. “Former Employee C” — Heald — “was generally the person authorizing the bank to pay the marketing company’s invoices,” according to the complaint.
Heald is currently listed as the chief financial officer and a partner in Bespoke Video Production of Little Rock, where Ricciardone is a partner and creative director.
What the forfeiture complaint called the “Overbilling by Marketing Company and Layton Stuart” was one of more than a dozen instances of alleged self-dealing by Stuart.
Accompanying that court action was the seizure of assets valued at $18 million to offset more than $16.8 million in bank funds that Stuart allegedly diverted to his personal use. (See table below.)
Northwestern Mutual and Pacific Life insurance loans* $7,784,502
TARP Funds $2,185,343
Interest from participation loans $2,000,000
Loan for John Hancock Life Insurance policy on Stuart** $1,761,000
Bank-paid personal air travel $1,750,000
Buying and renovating 32 Valley Club Circle $1,096,897
Sale of bank-owned condo in Dallas $765,130
Overbilled marketing restitution $550,000
Bank funds used to pay personal credit cards $377,132
5 personal vehicles purchased by bank $235,555
Embezzlement restitution by fired employee $101,003
Downpayment on 13 Lombardy Lane $53,307
Total $16,898,869
Assets Seized by Federal Agents
Net death benefit on John Hancock
Life Insurance policy on Stuart $17,693,837
Two Bank of America accounts $107,800
2013 Land Rover $67,093 #
2013 Lexus RX350 $46,268 #
2008 Escalade $62,314 #
2011 Cadillac SRX $45,247 #
Net proceeds from sale of house at 13 Lombardy Lane $25,992
Five One Bank accounts $25,263
2008 Global Electric Motorcar $14,633 #
Total $18,088,447
*Bank-owned life insurance policies on senior management.
**Loan was repaid from the $20 million payout after Stuart’s death and isn’t reflected in the diversion dollar total.
#Reflects price paid.
“I’m in a situation where I can’t offer any comments now,” said Richard Torti Sr., executor of Stuart’s estate and trustee of various Stuart family trusts. “But I can tell you the family has been devastated over the loss of their father, a husband and their provider.”
According to court filings, Stuart designated Heald as the original executor of his estate and trustee of the various family trusts created under his will dated Feb. 3, 2006.
Stuart named Torti as executor and trustee in a codicil to his will dated March 11, a mere 15 days before his death.
The largest asset seized was the net payout of a $20 million life insurance policy on Stuart. The government claims the $17.7 million is a fruit of Stuart’s allegedly illegal dealings and that he used tainted money to keep the John Hancock Life Insurance Co. policy in force after he was fired from the bank he owned. The 44-page forfeiture complaint portrays Stuart as living out of the bank, someone who didn’t draw the line between bank owner and fiduciary of a federally regulated financial institution.
In interviews with Arkansas Business after his removal from One Bank, Stuart never admitted to any wrongdoing. He didn’t deny any either.
Stuart did make intimations that the investigation would implicate others, and that there was more than one person of interest.
“I’m not the only one,” Stuart said.
ABCs of One Bank
Other casualties followed after the late Scooter Stuart was forced out of One Bank & Trust at the end of September. The federal investigation that was launched with an anonymous tip in March 2012 is expected to yield more names and charges in the coming weeks.
Before he died on March 26, Layton “Scooter” Stuart told Arkansas Business that he thought he knew who had stirred up trouble for him with the chief federal regulators of his One Bank & Trust: Michael Heald and Tom Ricciardone.
In August 2011, Stuart had fired Heald as One Bank’s executive vice president and chief operating officer and terminated the bank’s business relationship with Thinc Marketing Group, where Ricciardone was president.
According to Stuart, Heald told him: “I know where every skeleton is, and we’ll ruin your lives.”
After the Office of the Comptroller of the Currency forced the board of directors to oust Stuart from the bank last Sept. 28, Stuart said he received a text message from Ricciardone that started with “I told you we would get you” and ended with a particularly nasty expletive.
Federal agents have since revealed that three anonymous notes were sent to the OCC’s Little Rock field office, the first received on March 14, 2012. The three communications concerned questionable bank loans and fund transfers linked with two Little Rock houses owned by Stuart’s son and daughter.
Those notes prompted OCC scrutiny that exploded into a sweeping forensic audit of One Bank and a multi-agency criminal investigation led by the Internal Revenue Service.
No criminal charges have been made against anyone in connection with the One Bank investigation.
Heald didn’t return messages seeking comment, and Ricciardone declined comment. There is no evidence besides Stuart’s suspicions to link the two to the anonymous notes.
If they did alert the OCC, their actions might be filed in a drawer labeled: Law of unintended consequences.
Heald and Ricciardone were drawn deeply into a chain reaction of terminations and investigations when the scope of federal curiosity extended far beyond Stuart’s alleged self-dealing with One Bank funds to finance his children’s homes. Though unnamed, the two appear to be part of the narrative in the U.S. Attorney’s forfeiture complaint filed July 12 against Stuart’s estate.
Sources familiar with the investigation identify Heald as “former Employee C” in the complaint. Those same sources identify Ricciardone as “the owner of the marketing company” that allegedly overbilled One Bank by $1 million between January 2009 and August 2011.
According to the forfeiture complaint, “the owner of the marketing company eventually agreed to pay $550,000 restitution to the bank, and this agreement also ended the marketing company’s business relationship with the bank.”
The restitution was made through a $550,000 One Bank loan to “the owner of the marketing company” that was guaranteed by the owner’s father-in-law, according to the complaint. Ricciardone’s father-in-law is Little Rock attorney Richard A. Williams.
The $550,000, however, was allegedly redirected by Stuart into an account for his personal use. “Former Employee C” — Heald — “was generally the person authorizing the bank to pay the marketing company’s invoices,” according to the complaint.
Heald is currently listed as the chief financial officer and a partner in Bespoke Video Production of Little Rock, where Ricciardone is a partner and creative director.
What the forfeiture complaint called the “Overbilling by Marketing Company and Layton Stuart” was one of more than a dozen instances of alleged self-dealing by Stuart.
Accompanying that court action was the seizure of assets valued at $18 million to offset more than $16.8 million in bank funds that Stuart allegedly diverted to his personal use. (See table below.)
Northwestern Mutual and Pacific Life insurance loans* $7,784,502
TARP Funds $2,185,343
Interest from participation loans $2,000,000
Loan for John Hancock Life Insurance policy on Stuart** $1,761,000
Bank-paid personal air travel $1,750,000
Buying and renovating 32 Valley Club Circle $1,096,897
Sale of bank-owned condo in Dallas $765,130
Overbilled marketing restitution $550,000
Bank funds used to pay personal credit cards $377,132
5 personal vehicles purchased by bank $235,555
Embezzlement restitution by fired employee $101,003
Downpayment on 13 Lombardy Lane $53,307
Total $16,898,869
Assets Seized by Federal Agents
Net death benefit on John Hancock
Life Insurance policy on Stuart $17,693,837
Two Bank of America accounts $107,800
2013 Land Rover $67,093 #
2013 Lexus RX350 $46,268 #
2008 Escalade $62,314 #
2011 Cadillac SRX $45,247 #
Net proceeds from sale of house at 13 Lombardy Lane $25,992
Five One Bank accounts $25,263
2008 Global Electric Motorcar $14,633 #
Total $18,088,447
*Bank-owned life insurance policies on senior management.
**Loan was repaid from the $20 million payout after Stuart’s death and isn’t reflected in the diversion dollar total.
#Reflects price paid.
“I’m in a situation where I can’t offer any comments now,” said Richard Torti Sr., executor of Stuart’s estate and trustee of various Stuart family trusts. “But I can tell you the family has been devastated over the loss of their father, a husband and their provider.”
According to court filings, Stuart designated Heald as the original executor of his estate and trustee of the various family trusts created under his will dated Feb. 3, 2006.
Stuart named Torti as executor and trustee in a codicil to his will dated March 11, a mere 15 days before his death.
The largest asset seized was the net payout of a $20 million life insurance policy on Stuart. The government claims the $17.7 million is a fruit of Stuart’s allegedly illegal dealings and that he used tainted money to keep the John Hancock Life Insurance Co. policy in force after he was fired from the bank he owned. The 44-page forfeiture complaint portrays Stuart as living out of the bank, someone who didn’t draw the line between bank owner and fiduciary of a federally regulated financial institution.
In interviews with Arkansas Business after his removal from One Bank, Stuart never admitted to any wrongdoing. He didn’t deny any either.
Stuart did make intimations that the investigation would implicate others, and that there was more than one person of interest.
“I’m not the only one,” Stuart said.
ABCs of One Bank
Other casualties followed after the late Scooter Stuart was forced out of One Bank & Trust at the end of September. The federal investigation that was launched with an anonymous tip in March 2012 is expected to yield more names and charges in the coming weeks.
Tom Whitehead was dismissed as chief financial officer, executive vice president and director of One Bank in December. Two months later, Gary Rickenbach was dismissed as executive vice president, chief loan officer and director.
Sources familiar with the investigation identify Whitehead as “former Employee A” in the forfeiture complaint filed last month by federal prosecutors in Little Rock. Sources identify Matt Sweet, former controller and vice president at One Bank, as “former Employee B.” Sweet left the bank in January 2012. According to the complaint, “former Employee B” allegedly was dismissed by Stuart for embezzling money from the bank. Sweet has not been charged with any crime and Arkansas Business has been unable to locate him for comment.
The complaint alleges that “former Employee B” paid $110,000 in restitution to the bank, and $101,000 of that was diverted to Stuart.
Sources identify Michael Heald, One Bank’s executive vice president, chief operating officer and director until Stuart fired him two years ago, as “former Employee C.”
The alphabet soup of former employees allegedly were all involved in aiding Stuart’s diversion of bank funds, according to the forfeiture complaint.
Sunday, August 4, 2013
Former employee sentenced for credit union theft in Kansas
A woman has been sentenced to 21 months in prison for embezzling from a local credit union, according to a spokesman for the U.S. Attorney's Office.
Carla Welborn was sentenced Tuesday in U.S. District Court in Kansas City, Kan. As part of her sentence, she was ordered to pay $329,702 in restitution, according to information from James Cross, spokesman for the U.S. attorney of Kansas.
The crime occurred between January 2009 and January 2012 while Welborn worked at the Credit Union of Leavenworth County at the Eisenhower VA Medical Center in Leavenworth.
In November, Welborn pleaded guilty to the single count of embezzlement from a credit union.
According to a written plea agreement in the case, Welborn took money from the vault of the credit union's branch office on the VA grounds.
She also reportedly targeted the accounts of credit union members who didn't receive monthly balance statements as well as those who lived out of town or were ill. She redirected mailed statements so account holders wouldn't notice they were missing funds.
If affected account holders requested statements, she sent them fraudulent documents, according to the written plea agreement.
A former credit union employee, sentenced to 21 months in federal prison for embezzlement, targeted accounts of 23 members who were either ill, near death or who lived out of town to steal more than $300,000 over four years, according to court documents.
Carla Welborn, who worked at the Veterans Administration Medical Center branch of the $7 million Credit Union of Leavenworth County in Lansing, Kansas, was also ordered by a U.S. District Judge Kathryn Vratil in Kansas City on July 30 to pay restitution of $28,002 to the credit union and $329,702 to the CUNA Mutual Group.
The documents did not reveal Welborn's title at the credit union.
CULC, which has 1,650 members, was chartered in 1956 to serve veterans, though it also serves businesses, government agencies and individuals in Leavenworth County.
Court documents show Welborn befriended many members and performed extra services for them, such as reconciling accounts and helping them pay bills, even though she was not required by the credit union to provide these services.
In addition to targeting accounts of members who were ill, near death or who lived out of town, Welborn also targeted accounts of members that she knew were not receiving monthly balance statements.
Federal prosecutors said Welborn would redirect some credit union members’ mailed statements to the bank so account holders would not notice their accounts were missing funds. And when account holders wanted statements, Welborn would mail them fraudulent statements. To keep track of the stolen money, she kept a handwritten ledger with amounts taken from each account.
Eventually, according to court documents, Welborn would write checks payable to the credit union’s bank (Country Club Bank) if there was not enough cash on hand at the credit union for her to steal. Country Club Bank would cash the checks because Welborn would indicate that the funds would be used to replenish the “petty cash account” at the credit union.
In 2010, when the credit union changed its correspondent bank to Missouri Corporate Credit Union, the “petty cash” replenishments went directly to the main office in Lansing. Because Welborn did not have access to sufficient cash on hand to steal, she began taking the money out of members’ accounts.
Welborn also took money out of the credit union’s vault, according to court documents. Although the money in the vault was supposed to be counted by at least two employees, Welborn had been covering her tracks by using her son who was working with her at VA Medical Center branch.
“Welborn would often tell her son….the vault was counted and there was no need for him to do it,” court documents state.
Welborn’s son has not been charged by federal prosecutors.
When the credit union became aware of the fraud, an accounting firm was hired to conduct a comprehensive audit, which revealed Welborn stole $304,000 from 23 credit union members from Jan. 1, 2009 to Jan. 26, 2012.
Carla Welborn was sentenced Tuesday in U.S. District Court in Kansas City, Kan. As part of her sentence, she was ordered to pay $329,702 in restitution, according to information from James Cross, spokesman for the U.S. attorney of Kansas.
The crime occurred between January 2009 and January 2012 while Welborn worked at the Credit Union of Leavenworth County at the Eisenhower VA Medical Center in Leavenworth.
In November, Welborn pleaded guilty to the single count of embezzlement from a credit union.
According to a written plea agreement in the case, Welborn took money from the vault of the credit union's branch office on the VA grounds.
She also reportedly targeted the accounts of credit union members who didn't receive monthly balance statements as well as those who lived out of town or were ill. She redirected mailed statements so account holders wouldn't notice they were missing funds.
If affected account holders requested statements, she sent them fraudulent documents, according to the written plea agreement.
A former credit union employee, sentenced to 21 months in federal prison for embezzlement, targeted accounts of 23 members who were either ill, near death or who lived out of town to steal more than $300,000 over four years, according to court documents.
Carla Welborn, who worked at the Veterans Administration Medical Center branch of the $7 million Credit Union of Leavenworth County in Lansing, Kansas, was also ordered by a U.S. District Judge Kathryn Vratil in Kansas City on July 30 to pay restitution of $28,002 to the credit union and $329,702 to the CUNA Mutual Group.
The documents did not reveal Welborn's title at the credit union.
CULC, which has 1,650 members, was chartered in 1956 to serve veterans, though it also serves businesses, government agencies and individuals in Leavenworth County.
Court documents show Welborn befriended many members and performed extra services for them, such as reconciling accounts and helping them pay bills, even though she was not required by the credit union to provide these services.
In addition to targeting accounts of members who were ill, near death or who lived out of town, Welborn also targeted accounts of members that she knew were not receiving monthly balance statements.
Federal prosecutors said Welborn would redirect some credit union members’ mailed statements to the bank so account holders would not notice their accounts were missing funds. And when account holders wanted statements, Welborn would mail them fraudulent statements. To keep track of the stolen money, she kept a handwritten ledger with amounts taken from each account.
Eventually, according to court documents, Welborn would write checks payable to the credit union’s bank (Country Club Bank) if there was not enough cash on hand at the credit union for her to steal. Country Club Bank would cash the checks because Welborn would indicate that the funds would be used to replenish the “petty cash account” at the credit union.
In 2010, when the credit union changed its correspondent bank to Missouri Corporate Credit Union, the “petty cash” replenishments went directly to the main office in Lansing. Because Welborn did not have access to sufficient cash on hand to steal, she began taking the money out of members’ accounts.
Welborn also took money out of the credit union’s vault, according to court documents. Although the money in the vault was supposed to be counted by at least two employees, Welborn had been covering her tracks by using her son who was working with her at VA Medical Center branch.
“Welborn would often tell her son….the vault was counted and there was no need for him to do it,” court documents state.
Welborn’s son has not been charged by federal prosecutors.
When the credit union became aware of the fraud, an accounting firm was hired to conduct a comprehensive audit, which revealed Welborn stole $304,000 from 23 credit union members from Jan. 1, 2009 to Jan. 26, 2012.
Thursday, August 1, 2013
Former Va. bank manager gets 2 years for fraud.
A former Colonial Heights bank manager who stole about $155,000 from customers was sentenced Thursday to two years in federal prison.
U.S. District Judge John Gibney also ordered Shannon S. Hamilton to make restitution to SunTrust bank, which covered the victims' losses, and banned her from ever working for another financial institution.
The Prince George County woman offered a tearful apology before hearing her sentence.
"I lost my perspective and moral grounding," she said. "I live every day thinking about what I've done, and it haunts me."
Hamilton also turned to face a victim's granddaughter who testified against her and said she was "very, very sorry."
Gibney said the apology was one of the most sincere he has heard in court.
"Everyone's sorry when they get caught, but obviously this has touched you deeper than that," the judge told Hamilton.
However, he also noted that Hamilton targeted some vulnerable, elderly customers in a "fairly elaborate" three-year scheme that resulted in four bank employees being fired for following her directions to violate bank policies.
According to court records, the Prince George County woman misappropriated customers' funds while managing the bank branch from February 2008 to November 2011. She used the money for repayment of her own 401k loan and living expenses. She also repaid some victims with money taken from other victims.
U.S. District Judge John Gibney also ordered Shannon S. Hamilton to make restitution to SunTrust bank, which covered the victims' losses, and banned her from ever working for another financial institution.
The Prince George County woman offered a tearful apology before hearing her sentence.
"I lost my perspective and moral grounding," she said. "I live every day thinking about what I've done, and it haunts me."
Hamilton also turned to face a victim's granddaughter who testified against her and said she was "very, very sorry."
Gibney said the apology was one of the most sincere he has heard in court.
"Everyone's sorry when they get caught, but obviously this has touched you deeper than that," the judge told Hamilton.
However, he also noted that Hamilton targeted some vulnerable, elderly customers in a "fairly elaborate" three-year scheme that resulted in four bank employees being fired for following her directions to violate bank policies.
According to court records, the Prince George County woman misappropriated customers' funds while managing the bank branch from February 2008 to November 2011. She used the money for repayment of her own 401k loan and living expenses. She also repaid some victims with money taken from other victims.
Bank teller gets one year for embezzlement 'for love' in New York
A teller for Chase Bank stole $10,000 from his branch "for love."
He was sentenced to a day in prison in federal court Wednesday. In April, 24-year-old Imran Cheema pleaded guilty to one count of embezzling.
Cheema told district judge Michael Watson that he took the money to impress his girlfriend. He stole the money from a teller cash dispenser just before quitting his teller job last summer and moving to New York.
Cheema was caught when the theft was discovered a week later. The cash dispenser, which tellers use to refill their drawers, was short $10,000. A Secret Service criminal complaint showed Cheema at the dispenser.
In addition to the night in prison, Watson ordered him to repay the money, which he has done. He could have been sentenced to 30 years in prison and ordered to pay a $1 million fine
He was sentenced to a day in prison in federal court Wednesday. In April, 24-year-old Imran Cheema pleaded guilty to one count of embezzling.
Cheema told district judge Michael Watson that he took the money to impress his girlfriend. He stole the money from a teller cash dispenser just before quitting his teller job last summer and moving to New York.
Cheema was caught when the theft was discovered a week later. The cash dispenser, which tellers use to refill their drawers, was short $10,000. A Secret Service criminal complaint showed Cheema at the dispenser.
In addition to the night in prison, Watson ordered him to repay the money, which he has done. He could have been sentenced to 30 years in prison and ordered to pay a $1 million fine
Jackson Township, Ohio man accused of embezzlement
A Jackson Township financial adviser is facing a federal felony charge of bank embezzlement and five felony counts of filing false tax returns stemming from an alleged scheme to defraud multiple clients out of more than $442,000.
David Lee Cheviron, 61, was a financial accountant for FirstMerit Bank, Huntington Bank and Chase Bank from 2006 to 2010, during which time authorities believe he defrauded the banks and stole money from four clients, according to a news release from the U.S. Attorney’s Office in Cleveland.
Cheviron is accused of making unauthorized withdrawals from the investment accounts of the four clients and forging signatures to deposit money into his personal account, according to court records. He also is accused of failing to report the money received on federal tax returns.
The charges are a result of a joint investigation conducted by the FBI and Internal Revenue Service.
Federal prosecutors allege in court papers that Cheviron’s position as a financial consultant “allowed him to have personal contact with bank customers, access to bank records, and to communicate with, give directions to, and mislead employees” of the banks.
A court hearing is to be scheduled for mid-August. The charges were filed by way of a bill of information, which often signals a defendant’s cooperation with the government.
Cheviron could enter a change of plea to guilty on all or some of the charges, said Daniel Dever, a spokesman for the IRS office in Cleveland.
Cheviron’s hearing is to be in front of federal Judge Donald C. Nugent.
The case against Cheviron is being prosecuted by Assistant U.S. Attorney Vasile C. Katsaros.
David Lee Cheviron, 61, was a financial accountant for FirstMerit Bank, Huntington Bank and Chase Bank from 2006 to 2010, during which time authorities believe he defrauded the banks and stole money from four clients, according to a news release from the U.S. Attorney’s Office in Cleveland.
Cheviron is accused of making unauthorized withdrawals from the investment accounts of the four clients and forging signatures to deposit money into his personal account, according to court records. He also is accused of failing to report the money received on federal tax returns.
The charges are a result of a joint investigation conducted by the FBI and Internal Revenue Service.
Federal prosecutors allege in court papers that Cheviron’s position as a financial consultant “allowed him to have personal contact with bank customers, access to bank records, and to communicate with, give directions to, and mislead employees” of the banks.
A court hearing is to be scheduled for mid-August. The charges were filed by way of a bill of information, which often signals a defendant’s cooperation with the government.
Cheviron could enter a change of plea to guilty on all or some of the charges, said Daniel Dever, a spokesman for the IRS office in Cleveland.
Cheviron’s hearing is to be in front of federal Judge Donald C. Nugent.
The case against Cheviron is being prosecuted by Assistant U.S. Attorney Vasile C. Katsaros.
Subscribe to:
Posts (Atom)
Posts
