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Fraud Friday – TARP Funds Diverted to Buy a Florida Condo Results in Guilty Plea

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August 30, 2013

By Bob Coleman
Editor, Coleman Report

Fraud Friday – TARP Funds Diverted to Buy a Florida Condo Results in Guilty Plea

The DOJ has snared another community banker for malfeasance in TARP funds. The former Board Chairman pled guilty for misleading the feds about his use of $381,000 in bank bailout funds to purchase a luxury condominium in Florida.

In an unusally harsh statement the Western Missouri US Attorney said, “At a time when many other Americans were losing their homes, he was siphoning off public funds to buy a luxury vacation condo in Florida. These federal funds were intended to help stablilize the economy during a fiscal crisis. Instead, this disgraced business leader took advantage of the situation to benefit himself and other bank executives, then lied to federal investigators in an attempt to hide his scheme.”

Ahh, the lie. The coverup. Or more accurately, failing to offer a full disclosure of the facts. That’s what did him in.

This is what our former chairman wrote to the Feds just one week after the bank purchased the property, “We are a small central Missouri community bank and while I would like to be able to provide you with very specific and quantitative responses we are currently operating under the assumption that the worst scenario could occur and the TARP proceeds will provide vitally needed infusions to a bleeding patient.”

The Inspector General said failing to disclose the purchase is a crime. SIGTARP, that’s the acronym for Special Inspector General of the Troubled Asset Relief Program, writes, “The purpose of TARP is to promote financial stability and lending in a time of national economic crisis, not to bankroll the purchase of luxury vacation properties for bank executives. When SIGTARP required Mainstreet Bank to disclose how it spent TARP funds, bank Chairman and CFO Woods failed to tell the truth that within days of receiving the TARP funds, the bank spent more than a third of the funds purchasing a waterfront condo in Florida for his and other executives’ use. SIGTARP and our law enforcement partners will hold accountable and bring to justice those guilty of crimes related to TARP.”

However, check out this cryptic statement by the bank. It implies the purchase was an REO property and not a bank executive retreat mansion.

“In regards to bank owned real estate, specifically the condo in question, the bank’s business model dating back to early 2007 included investments in real estate, which the bank followed through to its logical conclusion. This was almost 2 years prior to the existence of TARP, and the recession crisis. The government informed the bank that no changes to its business model were necessary as a TARP recipient. Those rules changed a year after the funds were received by the bank. The bank currently has no real estate of this nature.

“The misleading document signed by Mr. Woods in 2009 was prepared by a former bank executive for Mr. Woods’ signature. Mr. Woods accepts his own responsibility to the misdemeanor charge.

“Mr. Woods was eager to accept the agreement offered, ending a long and costly review of the facts and issues for both sides. The bank and board wish Mr. Woods and his family the best as the healing process begins.”

In any event, today’s fraudster will be sentenced at a later date. He faces up to one year in prison and a $100,000 fine.

Read the US Attorney’s statement here

Read Mainstreet Bank’s statement here

 

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