Bank VP Sentenced for Fraud Involving Uncollectable Loans

Allison Tussey —  December 5, 2011 — Leave a comment

Dwayne Charles Holcombe, 50, a former vice president at a northwest Alabama bank, was sentenced to two years and five months in prison for fraud that cost a small, locally owned bank more than $1.4 million in noncollectable loans over six years.

U.S. District Judge Karon O. Bowdre sentenced Holcombe on one count of bank fraud and three counts of false entry in bank records. Holcombe pleaded guilty to the charges in July. The judge also ordered him to pay $1.3 million in restitution and to forfeit that same amount to the government.

Holcombe was employed by Farmers and Merchants Bank, Waterloo, Alabama, for more than 25 years, from 1982 to 2010. He served as a loan officer, security officer, and vice president, and also served on the bank’s board of directors.

According to court records, Holcombe conducted his fraud as follows:

In about March 2004, he began changing paper and computer records to extend the due-date on some loans. Those changes caused the bank not to generate late notices when the loans actually were due and no payment was received. The delinquent notices would have been reviewed by bank officers and been made available to bank examiners and auditors. Holcombe made more than 500 changes to loan due-dates through August 2010 when the bank discovered the alterations.

In June and July 2010, Holcombe also began altering computer loan records by replacing the borrower’s name with the name of another bank customer who had not received the loan. He changed the names on eight loans.

The FBI investigated the case. Assistant U.S. Attorney Russell E. Penfield prosecuted the case.

U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Patrick J. Maley announced the sentence.

“This was a small bank that trusted Holcombe and helped him establish himself as a top-level official at Farmers and Merchants Bank. He betrayed that trust and his fraud exposed the locally owned bank to significant losses,” Vance said.

Allison Tussey

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