Fraud Friday – Banker to serve 15 months in prison for Refinancing Past Due Loans, Lying to Loan Committee


August 16, 2013

By Bob Coleman
Editor, Coleman Report

BusinessFraudHandcuffsAccording to his attorney, today’s fraudster didn’t pocket a dime, but was simply a good ol’ boy banker trying to help out his customer.

Said his attorney to the court, “Howard’s case is very different from the traditional white-collar crimes, in that Howard never obtained these loans on behalf of himself, nor did he receive any money to obtain these loans on behalf of a particular borrower.”

Prosecutors shot back that while the investigation did not find any payments or kickbacks, the defendant was rewarded for his loan portfolio size with salary and promotions.

Here is a partial laundry list of stuff he did that earned him 15 months in a federal work camp and liable for $2.5 million in restitution after pleading guilty to one count of loan fraud.

· Our banker made four loans to a “financially stressed” borrower that transferred the credit problems from other lenders to the bank
· To avoid Bank management’s close scrutiny and possible disapproval of the four loans, our banker attempted to conceal that the loans were made to pay down past due loans and operating expenses.
· The banker falsely stated in Bank records and to Bank officers that the proceeds of each loan would be used by the borrower to purchase trucks or trailers.
· Our banker knew that no trucks or trailers would be purchased with the proceeds of the four loans, and therefore, no purchase money security interest would be obtained. In addition, the banker obtained only a security interest in other trucks and trailers that were pledged through the borrower’s connections and did not perfect the security interest in any collateral, including the trucks and trailers pledged. As a result, the banker left the Bank in a collateral position subordinate to any other lender with a prior or perfected interest in that collateral.
· As a result of the banker’s misconduct the Bank incurred losses on all four loans, totaling $269,485.

Read more here

Read the FDIC debarment action here