Fraud Friday — SIGTARP Files False Claims Act Clawback from the Grave

July 17, 2015

By Bob Coleman
Editor, Fraud Friday

In the same week former Attorney General Eric Holder told the Financial Times that record fines on banks were a better solution than “trying to make examples out of people,” TARP’s Special Inspector General continues to indict community bankers from failed institutions from the Great Recession.

Bragging she has sent over 100 community bankers and community bank loan customers to jail, Christy Romero now wants a clawback from the grave.

SIGTARP is suing the estate of Layton Stuart, the former president of One Bank & Trust in Little Rock.

According to the lawsuit, Stuart applied in late-2008 for a TARP investment totaling $17.3 million. The complaint alleges that Stuart made false statements about the financial condition of One Bank and its intentions for the use of the TARP funds.

In particular, the statements and TARP application allegedly concealed serial frauds that Stuart and other One Financial directors and bank executives had been committing and intended to continue committing on One Bank.

The schemes involved Stuart’s diversion of funds from One Bank for personal use including, within 30 days of receiving the $17.3 million in TARP funds, the diversion of more than $2 million into personal accounts for his own use.

“The complaint filed in federal court is the first time a TARP bank has been charged under the False Claims Act for making material misrepresentations to Treasury in order to obtain taxpayer TARP bailout funds,” says Christy Romero, SIGTARP.

“TARP was passed by Congress to stabilize banks and our nation’s financial system during a time of crisis, not for the benefit of those who resort to false claims as a pretext for receiving TARP. We commend the Justice Department and our law enforcement partners for standing united with SIGTARP to hold accountable those who violate the law at the expense of taxpayers’ hard-earned TARP investments.”