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Fraud Friday — Bank VP Gets 39 Months for Playing Robin Hood

January 15, 2016

By Bob Coleman
Editor, Fraud Friday

Fraud Friday — Bank VP Gets 39 Months for Playing Robin Hood

This bizarre fraud case results in a small business lending bank vice president being sent to jail for 39 months, for creating fictitious loans, and disbursing them to his borrowers.

He didn’t pocket a dime.

He approved loans to uncreditworthy borrowers.

I call this personality disorder the Robin Hood syndrome. The small business banker becomes so invested to help a borrower, that rules, and laws, are ignored to the detriment of the bank, the client, and of course, the loan officer.

This is not unique to Mark Whipple, a “rising” start of M&T Bank, who lost his job and career in 2013. I’ve covered similar stories before.

What is the drive to commit loan fraud and act as Robin Hood in redistributing capital from the bank to the borrower?

The judge didn’t have the answer.

“I’m having trouble making sense of this,” said U.S. District Judge Elizabeth A. Wolford. “[But], I’m skeptical that your motives were truly altruistic.”

Writes Buffalo News’ Phil Fairbanks;

“Sources close to the case have suggested in the past that Whipple’s real motivation may have been a desire to avoid the kind of loan defaults that could have embarrassed him and cost him his job. They noted that Whipple forged signatures and created fraudulent documents as part of his scheme and suggested he may have grown desperate in his efforts at hiding his wrongdoing.

“Federal prosecutors claim Whipple did benefit from his scheme in that he continued to receive the six-figure salary, bonuses and stock options he earned as an M&T vice president.”

The fraud began in 2008 and unraveled in 2013 when the bank discovered 12 fraudulent loans totally $5.3 million.

Whipple disbursed those funds to his borrowers.

Mark forged signatures on loan documentation related to the origination of many of the “funding loans” and had mail diverted to locations other than the credit worthy clients’ addresses to avoid detection. When customers questioned the defendant regarding irregularities in their loan accounts, Whipple told them it was a mistake or a bank error and promised to correct the problem. These problems were never corrected as the defendant stated they would be and he subsequently covered the irregularities up through the creation of new funding loans.

Similar to a Ponzi scheme, Whipple used some of the proceeds from the fraudulent loans to make payments on the previously obtained fraudulent loans in order to avoid detection by the bank and the customers whose credit was fraudulently used.

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