May 6, 2016
By Bob Coleman
Editor, Fraud Friday
Pennsylvania based-Nova bank’s top two execs are guilty of conspiracy, TARP fraud and two counts of making false statements. Former CEO Brian Hartline, 51, was found not guilty of bank fraud while past Chairman Barry Bekkedam, 48, was found not guilty of bank and wire fraud charges.
The southeastern Pennsylvania and South Jersey bank had 13 branches when seized by the FDIC in 2012 — with a loss of $90 million.
Bekkedam said Nova never received TARP money so there was never any actual loss in this case. He also said there was no evidence that he had any role in or ever saw Nova’s TARP application.
“The government came after me with a theory in search of a crime,” Bekkedam said. “They identified normal, legal, and appropriate business activity — which is the only kind I engage in — and assigned it a devious motive. The jury was persuaded, but I am and was innocent of any wrongdoing; I committed no crime.”
Bekkedam said there was no law prohibiting the circular transactions and that he thinks his lawyers proved at trial that because he was no longer a Nova board member, he did not exert influence over bank actions. He said he simply referred two investors to the bank in order to help the bank, which he claims was legal and legitimate business activity as well.
Bekkedam said he cooperated with prosecutors even after being indicted.
“No defendant does that, but I did, because I was convinced that the prosecution was committing a grievous error and I thought they could be made to see it, too,” Bekkedam said. “It took many months and hundreds of thousands of taxpayer dollars for them to persuade the jury of these trumped-up and false charges. I am distraught, and it is terrible to have my name and reputation attacked when I know I am totally innocent.”
Says Special Inspector General for TARP (SIGTARP) Christy Romero:
“TARP fraud is a heinous crime.
“Hartline and Bekkedam were convicted today for not telling the truth about the health of NOVA Bank to get TARP funds. NOVA Bank was not a healthy bank when it applied for TARP. It was suffering from major losses and did not have sufficient capital.
“Of the more than 700 banks that received approval to get TARP, only seven had conditional approval, and NOVA Bank was one of them: the government would only invest TARP funds in NOVA Bank if it raised $15 million from investors. Hartline and Bekkedam hatched a fraudulent scheme to dupe the government into believing that the bank had raised private investor money.
“As the CEO and bank president, Hartline was in a position of trust. Even though Bekkedam had left the bank by 2008, he wielded significant influence over NOVA Bank because his company owned more than half the bank and he was one of the former founders.
“His own emails discuss his plans to get TARP. Rather than bring outside money into the bank as the government required, they used the bank’s own money. In a one two hour transaction, the bank’s own money flowed out and then came right back into the bank.
“They hid this fact from the government, which wanted more money in the bank—not double counting of existing money.
“The jury has brought justice to these bank executives who defrauded an emergency crisis-era rescue program. The fact that the bank did not get TARP funds boils down to luck and timing, not because these defendants decided to come clean. The convictions of these bankers today is the reason why SIGTARP was created—to bring justice to bankers who commit fraud related to TARP.”