Fraud Friday – Loan Officer’s Warning Ignored in Massive Bank Fraud
January 6, 2023
Fraud Friday – Loan Officer’s Warnings Ignored in Massive Bank Fraud
By the time the bank closed, bank executives’ unsound lending practices and bad loans cost the FDIC almost $1 billion. Frank Adolph, a businessman and borrower, along with his related entities ultimately owed the bank and contributed to the FDIC’s losses by approximately $6.1 million.
Frank Adolph’s loan officer repeatedly alerted the President and Chief Credit Officer, Ashton Ryan and William Burnell, about Frank’s fraudulent accounts receivable. The loan officer also informed them that Frank was “living beyond his means” and could not pay his debts. Ryan and Burnell approved and facilitated loans for Frank in spite of the loan officer’s warnings and their knowledge that the loans contained misrepresentations and omissions. Additionally, they did not alert the Board, auditors, or examiners of the fraudulent accounts receivable.
In the loan documents, Frank made misrepresentations and material omissions in order to obtain loans. For example, he submitted a forged statement from a different bank for a non-existent account. The statement gave a false impression that his company was receiving payments from companies that did not do business with him. In another case, Frank fabricated accounts receivable so he could borrow more money. He submitted a certificate that falsely listed two companies as owing his company tens of thousands of dollars. He had never done business with one of the companies and had not done business with the other company in years.
Further, Ryan and Burnell also made misrepresentations and omissions on their own accord regarding Frank’s loans. Aware of Frank’s fraud, the two recommended, authorized, and approved $5.8 million in new loans, renewals with increases, and consolidated loans. Ryan and Burnell included Frank’s false accounts receivable in the loan documents.
The Chief Credit Officer, William Burnell, and the Executive Vice President, Robert Calloway, previously pleaded guilty to the fraud. The former President of the bank, Ashton Ryan, has not pleaded guilty and is set to go to trial early this year.
The Department of Justice announced that Frank Adolph pleaded guilty to one count of conspiracy to commit bank fraud for his role in the First NBC Bank fraud conspiracy. Frank Adolph is scheduled to be sentenced on March 30, 2023.
DOJ Press Release
Read Our Previous Reporting:
Fraud Friday – Bank CEO Hides Nearly $1 Billion in Fraudulent Loans from Regulators – 2/12/21
Fraud Friday – Bank Executive Vice President Pleads Guilty to Conspiracy to Defraud his Bank – 8/5/22
Fraud Friday – First NBC Fraud Costs Almost $1 Billion – 8/12/22