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Fraud Friday – Community Bank Commercial Loan Officer Guilty of False Statements

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July 11, 2014

By Bob Coleman
Editor, Coleman Report

sigtrapAnother community bank commercial loan officer is facing jail after the Feds wrote off a $500,000 loss from a TARP fund investment.

Former senior vice president Michael Yancey lied about the terms of a loan he secured on behalf of a bank customer in order to get a loan approved by Great Bend, Kansas based Farmers Bank’s loan committee.

He pled guilty Wednesday.

Says the Tarp Inspector General, “After the bank received TARP funds, Yancey recommended that the bank renew the loan without correcting falsified information on file about the loan. Ultimately, Farmers Bank wasn’t able to repay its TARP investment in full. Crime against a TARP bank is crime perpetrated against the federal taxpayers who funded the TARP bailout. SIGTARP and our law enforcement partners will bring to justice perpetrators of crime related to TARP and hold them accountable for their actions.” In March 2007, Yancey helped a bank customer obtain an $825,000 commercial loan for the purchase of real estate in Basehor, Kansas. The customer submitted to Yancey a falsified contract of sale stating that the purchase price for the Basehor property was $1.1 million.

The actual purchase price of the Basehor property was $850,000.

Yancey, knowing that the purchase price was falsified, accepted the contract of sale as part of the Farmers Bank loan file in order to make it appear that the Basehor loan conformed to a maximum 75 percent loan-to-value ratio so that the loan could be approved by the bank’s loan committee.

Additionally, Yancey created an “Application for Approval of Large Credit Facilities” for the Farmers Bank loan committee that falsely stated that the Basehor real estate transaction involved a seller carryback in the amount of $150,000 and a borrower equity injection in the amount of $125,000.

In subsequent years, Yancey recommended renewing the Basehor loan – even after the bank had received and held federal TARP funds – and consolidated it with other loans without correcting the false statements contained in the Farmers Bank loan file. On May 19, 2014, Yancey was charged with one count of conspiracy to make false statements on a loan application as a result of the scheme. A sentencing date has not yet been scheduled.

Yancey faces a maximum penalty of five years in federal prison and a fine up to $250,000.

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