September 20, 2013
The first sentence is in from the Bank of Commonwealth fraud trial that netted guilty verdicts of three Virginia community bankers. And it is stiff – 17 years for 49 year-old former EVP Stephen Fields. As if it matters, he was also ordered to pay $331 million in restitution to the FDIC.
Fields was convicted of conspiracy to commit bank fraud, false entries in bank records, misapplication of bank funds, and false statement to a financial institution.
Three borrowers testified against the former senior loan officer that they all received preferential treatment such as affording large overdrafts, sometimes for hundreds of thousands of dollars, below-market interest rates, loans to make interest payments on other loans, and easy access to credit. Fields continued to lend millions of dollars to these borrowers despite knowledge of their serious financial problems.
As a further part of the scheme, Fields assisted in the removal of hundreds of past-due loans from past due loan reports prepared for the bank’s Board of Directors. For example, Fields took draws from a construction loan for the 345 Granby Street property to make payments on wholly unrelated loans. Fields was well aware that such loans should appear on the bank’s past due loan report but took steps to conceal their past due status to mask the bank’s diminishing financial condition.
On more than one occasion, the Federal Reserve Bank of Richmond criticized Fields for failing to comply with the bank’s internal controls and for jeopardizing the safety and soundness of the financial institution. This is so even though Fields used to work at the Federal Reserve Bank of Richmond as a safety and soundness examiner.
Says the FBI, “Today, those responsible for the corruption leading to one of the biggest bank failures in Virginia history impacting our Hampton Roads community were held accountable. The extensive two-year investigation led by FBI Norfolk Division, in conjunction with IRS, SIGTARP, FDIC-OIG, and IG-FRB, identified and unraveled a criminal enterprise conducting complex fraudulent financial transactions. This case reflects the FBI and its partners’ commitment to protect our communities by aggressively investigating and bringing to justice individuals exploiting their influence or position for personal gain.”
“The culture among senior executives at TARP applicant Bank of the Commonwealth was rotten at its core, and Fields was a principal contributor to the stench of corruption and entitlement at the bank. As a former bank examiner, Fields should have stopped and blown the whistle, but instead, he engaged in an extend and pretend scheme to mask past-due loans, rigged auctions to get foreclosed property off of the bank’s books, and lied to bank examiners. Let today’s sentencing serve as a warning to anyone engaged in fraud involving TARP-SIGTARP and its law enforcement partners will bring justice and hold you accountable for your crimes.”
The FBI concludes, “Fields also facilitated self-dealing and preferential treatment at the bank’s expense for co-defendants Edward Woodard , the former bank president, and his son Troy Brandon Woodard.
“For example, Fields arranged for a borrower to purchase Edward Woodard’s personal condominium at an inflated price using 100 percent financing from the bank. Fields himself substantially benefited throughout this conspiracy by receiving substantial benefits from the bank in the form of a large salary, a company car, and other employment benefits. Moreover, one of the bank’s largest borrowers, paid over $6,000 to install granite counter-tops and other amenities in Mr. Fields’ kitchen.”