June 30, 2017
By Bob Coleman
Editor, Fraud Friday
Fraud Friday — Community Bank CEO Gets 5 Years in Jail for Concealing $3.4 Million Bad Loan
“Today, a federal court sentenced to prison a bank president along with the bank’s vice president, who were investigated and arrested by SIGTARP,” says Special Inspector General Christy Goldsmith Romero.
“Taxpayers lost $7.5 million in TARP dollars invested in GulfSouth Private Bank – a bank that failed after being led by the top two officers committing bank fraud. Bank president Tony Atkins brought in friends and family as co-conspirators in this conspiracy to make troubled loans appear current. Each of those co-conspirators have been convicted. I want to thank the U.S. Attorney for the Northern District of Florida for unwavering dedication, including Assistant United States Attorney Tiffany Eggers who was committed to seeking justice.
“In 2008, at the height of the financial crisis, former GulfSouth Private Bank president Anthony Atkins had a decision to make: tell the truth about the bank’s troubled finances or take intricate steps to criminally conceal millions of dollars in bad loans.
“Unlike most bank executives, Atkins chose the latter and, along with former vice president Samuel Cobb, hatched a scheme to hide the loans and make the bank appear healthier than it actually was. GulfSouth then received $7.5 million from TARP, a program designed for healthy banks. But GulfSouth was not a healthy bank and later failed—causing taxpayers to lose their entire investment. SIGTARP will continue to bring justice to bankers who commit bailout-related fraud.”
“This bank fraud case is a reminder that my office will vigorously prosecute those who do not conduct ethical transactions, especially financial representatives who abuse their positions of trust,” said U.S. Attorney Canova. “I commend the hard work of the investigators and prosecutors who enforce our federal laws and ensure that justice is served.”
“The FDIC Office of Inspector General is committed to working with U.S. Attorneys and law enforcement partners throughout the country in investigating and prosecuting individuals whose fraudulent activities threaten the safety and soundness of our nation’s banks,” says Jason Moran, Special Agent in Charge, FDIC-OIG.
In 2007, a borrower told then GulfSouth’s president Tony Atkins he was no longer going to be able to make payments on $3.4 million of mortgage loans secured by three condominiums.
To avoid classifying the loan as bad debt, Atkins issued three new loans to straw borrowers on a non-recourse basis making it appear the loans were current and performing as agreed.
After GulfSouth received $7.5 million in TARP funds the bank sold the condominiums in short sales.
The bank failed in 2012 with a $36 million charge to the FDIC insurance fund.
Atkins was sentenced to 63 months in jail and ordered to pay more than $2.4 million in restitution for conspiracy to commit bank fraud, four counts of false statements to a federally insured financial institution, bank fraud, and mail fraud affecting a financial institution.