January 27, 2017
By Bob Coleman
Editor, Fraud Friday
Fraud Friday — Community Bank Chairman and Founder Gets 11 Months In Jail for TARP Fraud
Barry Bekkedam, aged 49, crime? Creating a false TARP application.
“Lending drives economic growth and law enforcement plays an important role in protecting banks’ ability to lend by removing criminals from their ranks,” says Christy Goldsmith Romero, Special Inspector General for TARP. “TARP is intended for healthy banks. NOVA was not a healthy bank. As NOVA’s founder, Bekkadam wielded enormous influence over the bank, allowing him to orchestrate a conspiracy with its CEO to cook the bank’s books to make it appear that the bank had healthy capital levels. SIGTARP stands united with the United States Attorney’s Office in combatting fraud in banks.”
In 2008, NOVA faced failure because of bad loans and investments. The bank, applied for approximately $13.5 million through the U.S. Department of the Treasury Troubled Asset Relief Program.
In June 2009, NOVA Bank was approved to receive the TARP funds on the condition that the bank raised $15 million in additional, private capital.
But, Barry arranged for NOVA Bank to loan money to three individuals to transfer to NOVA’s parent company so it would appear as though the bank had new capital from an outside investor.
In fact, the “new money” investment was the bank’s own money.
The bank ultimately did not receive TARP funds, and in October 2012, the bank failed and was closed by state and federal banking regulators.
The estimated cost of the failure to the FDIC was $91 million.