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Fraud Friday — Six Months in Jail for “Extend and Pretend” Lending

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June 12, 2016

By Bob Coleman
Editor, Fraud Friday

“This TARP bank officer engaged in an ‘extend-and pretend’ bank fraud scheme, extending what looked on the bank’s books as new loans for new purposes to new borrowers, when Harrison knew that the loan proceeds would be used to make other delinquent loans from other borrowers look current. To further his bank fraud scheme, he filed false documents needed for the bank to issue the new loans. The TARP bank lost money because of the fraud of its own officer,” says Christy Romero, Special Inspector General for TARP

“Brian Harrison had the opportunity to play it straight, comply with the law, and tell the truth about losses on the loans, but instead, he resorted to fraud and outright lies. Vigorous criminal law enforcement by SIGTARP and our partners leaves the banking industry safer than we found it by enforcing change through justice for crime related to TARP. However, there must be a cultural change within institutions that emphasizes honesty, integrity, and adherence to the law, to restore public trust and confidence in the financial industry. ”

Harrison’s duties included reviewing, approving, and disbursing loans for Farmers Bank and Trust, located in Great Bend, Kansas.

“He plead guilty to one count of bank fraud in March for making false statements to the bank to hide the poor performance of various loans he made. His false statements were intended to deflect questions from bank officers about problems with his loans. He falsified credit and loan applications, promissory notes, and security agreements on behalf of a purported debtor without the debtor’s proper authority.”

In June 2009, Farmers Bank received $12 million in TARP funds. In November 2012, the bank exited TARP by purchasing the Treasury Department’s stake in the company at a discount, resulting in a loss of $560,748 on the TARP investment.

Harrison is sentenced to six months in federal prison followed by six months home detention. He is ordered to pay $124,000 in restitution and $50,000 in a personal forfeiture judgment.

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