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Anthony J. Atkins, 51, Eufaula, Alabama, was convicted by a Federal Jury after a 5-day trial, of conspiracy to commit bank fraud, four counts of false statements to a federally insured financial institution, bank fraud, and mail fraud affecting a financial institution.

Co-conspirator Bruce A. Houle, 57, Inlet Beach, Florida, pled guilty to conspiracy to commit bank fraud and one count of false statement to a federally insured financial institution.

Co-conspirator Samuel D. Cobb, 37, Destin, Florida, pled guilty to conspiracy, four counts of false statement to a financial institution, and bank fraud.

In 2007, according to court documents and evidence, an individual went to Atkins, the president of GulfSouth Private Bank, and notified Atkins that the individual’s company, which had been loaned $3.4 million, was no longer going to be able to make payments on the mortgage loans issued by GulfSouth Private Bank that had been secured by three condominiums.  In an effort to conceal that the loans were going into default, and instead of recognizing that the $3.4 million in loans were losses to the bank, Atkins devised a scheme to conceal the bad debt.

As a part of the scheme, Atkins and Cobb solicited Houle, Mark W. Shoemaker, Michael Bradley Bowen, and William Blake Cody to take out new loans with the bank to purchase the three condominiums. To persuade Houle, Shoemaker, Bowen, and Cody to engage in the scheme, Atkins and Cobb told these individuals that the loans would be non-recourse, meaning that, if the men defaulted, GulfSouth would have no recourse against them.

Thereafter, Atkins and Cobb caused new mortgage loans and additional lines of credit to be issued for approximately $3.8 million to the men they had solicited. According to the terms of the fraudulent loans issued during the scheme, the men Atkins and Cobb solicited were not required to make any payments on the loans until the loans came due months down the road. These new loans were then used to pay off the old loans that were going into default. Issuing these new loans and new lines of credit created the appearance that the debt was “performing”, which allowed Atkins to avoid having to report the loans associated with the condominiums as bad debt, as required. Further, as a part of the scheme, Atkins and Cobb caused fraudulent security agreements to be prepared that falsely represented that Houle, Shoemaker, Bowen, and Cody were obligated to repay their respective new mortgage loans and lines of credit.

In September 2009, GulfSouth received $7,500,000 in Troubled Asset Relief Program (“TARP”) funds from the United States Treasury. Thereafter, Atkins and Cobb allowed the condominiums that were collateral for the mortgage loans to be sold in short sales, resulting in a loss to GulfSouth. Further, Atkins allowed the deficiencies and the lines of credit to be charged off of GulfSouth’s books and records.

The defendants face a maximum of 30 years in prison for each count. The sentencing hearings are scheduled at the United States Courthouse in Pensacola, as follows:

  • Atkins: May 31, 2017, at 10:30 a.m.
  • Houle: May 31 at 2:00 p.m.
  • Cobb: May 16 at 10:30 a.m.

The jury’s verdict and the guilty pleas were announced by Christopher P. Canova, United States Attorney for the Northern District of Florida.

The case resulted from a joint investigation by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG).  Assistant United States Attorney Tiffany H. Eggers prosecuted the case.

This bank fraud case is a reminder that my office will vigorously prosecute those who do not conduct ethical transactions, especially financial representatives who abuse their positions of trust,” said U.S. Attorney Canova. “I commend the hard work of the investigators and prosecutors who enforce our federal laws and ensure that justice is served.”

In 2008, at the height of the financial crisis, former GulfSouth Private Bank president Anthony Atkins had a decision to make: tell the truth about the bank’s troubled finances or take intricate steps to criminally conceal millions of dollars in bad loans,” said Christy Goldsmith Romero, Special Inspector General for TARP. “Unlike most bank executives, Atkins chose the latter and, along with former vice president Samuel Cobb, hatched a scheme to hide the loans and make the bank appear healthier than it actually was. GulfSouth then received $7.5 million from TARP, a program designed for healthy banks. But GulfSouth was not a healthy bank and later failed—causing taxpayers to lose their entire investment. SIGTARP will continue to bring justice to bankers who commit bailout-related fraud.”

The Federal Deposit Insurance Corporation Office of Inspector General is committed to working with U.S. Attorneys and law enforcement partners throughout the country in investigating and prosecuting individuals whose fraudulent activities threaten the safety and soundness of our nation’s banks,” said Jason Moran, Special Agent in Charge, FDIC-OIG. “It is particularly troubling when those individuals are bank insiders like Messrs. Atkins and Houle, who violate the public trust, conspire with others, and engage in activities that ultimately cause losses to their banks. Today’s verdict and the associated guilty pleas should deter others from pursuing similar criminal activity.”

Michael L. Johnson, 56, Odessa, Florida, pled guilty to misappropriation of bank funds and embezzlement.  He faces a maximum penalty of 30 years in federal prison.

According to the plea agreement and court proceedings, Johnson was employed as a Senior Vice President/Special Assets Officer at American Momentum Bank.  In his capacity as a Special Assets Officer, Johnson was responsible for marketing and selling bank-owned properties to investors in order to remove these troubled assets from the bank’s balance sheet.  Johnson signed the closing documents, including the HUD-1 Settlement Statement, on behalf of American Momentum Bank.

Beginning around June 2012, and continuing through November 2014, Johnson devised a scheme to misapply and embezzle funds provided by American Momentum Bank.  After the sale of bank-owned properties had been approved by the bank, Johnson set up closings with real estate settlement agents.  He then contacted the agents and ordered additions and/or changes to the disbursement side of the HUD-1.  After closing, funds provided by American Momentum Bank were directed to bank accounts controlled by Johnson’s family members.

The guilty plea was announced by United States Attorney A. Lee Bentley, III and the case was investigated by the Unites States Secret Service, the Tampa Police Department and the Federal Housing Finance Agency – Office of Inspector General. It is being prosecuted by Special Assistant United States Attorney Chris Poor.

 

Paul Harold Doughty, 67, Edmond, Oklahoma, the former president and chairman of First State Bank of Altus (“FSB”), was convicted on ten charges of bank fraud, conspiracy to commit bank fraud, misapplication of bank funds, making a false bank entry, and unauthorized issuance of a bank loan in connection with FSB and various loan schemes, .  Fred Don Anderson, 67, Eagle Point, Oregon, pleaded guilty to one count of conspiring with Doughty to commit bank fraud.  Anderson partnered with Doughty in several businesses headquartered in Altus, Oklahoma.  In July 2009, state banking regulators closed FSB due to the bank’s loan losses, and the Federal Deposit Insurance Corporation was appointed as the bank’s receiver.

In April 2015, a federal grand jury charged Doughty and Anderson with fraud related to three alleged loan schemes: (1) a series of FSB loans to finance a real estate development in Routt County, Colorado; (2) a series of “senior life settlement loans” from FSB to support an Altus aerospace company; and (3) a $2 million unauthorized loan from FSB to a company under Doughty and Anderson’s control.

The jury heard that in 2006 and 2007, Doughty and Anderson recruited buyers for 19 Colorado real estate lots priced at approximately $700,000 each.  Doughty approved and issued 14 lot loans to buyers, totaling more than $10,000,000 in loan proceeds for the seller, Mountain Adventure Property Investments, LLC (“MAPI”).  MAPI was a Colorado company that Anderson had an indirect ownership interest in and where he served as president and manager.  Evidence at trial showed that each loan exceeded Doughty’s individual lending authority at FSB, and most of the loans were issued without approval of FSB’s loan committee, including a $580,000 loan to Anderson’s personal company.  The jury heard that Doughty and Anderson presented lots to borrowers as “zero money down” investments, and that the down payments for the purchases were often advanced or refunded to the buyers by Anderson on behalf of MAPI.  Doughty and Anderson also assured the buyers that MAPI would make all payments on the loans to the bank.  The jury heard that on the few occasions when Doughty presented a Colorado loan to FSB’s loan committee, he misrepresented the source and amount of borrowers’ down payments and the borrowers’ responsibility for making payment on the loans.  In connection with these Colorado lot loans, the jury convicted Doughty of one count of bank fraud conspiracy, four counts of bank fraud relating to separate lot loans, and one count of unauthorized issuance of a loan to Anderson’s personal company.

Trial evidence showed that Doughty funded five so-called “senior life settlement” loans through FSB in 2008.  Each loan was $2.5 million, and one of the loans went to Anderson’s personal company.  Doughty and Anderson recruited borrowers to take out these “self-paying” loans to provide money for investments in Altus-based Quartz Mountain Aerospace, Inc. (“QMA”).  Evidence at trial showed that a portion of the loan proceeds was invested in QMA, and another portion would pay the loan’s interest.  The remaining proceeds on the loans would buy and maintain third-party life insurance policies, where the death benefits on the third parties were intended to repay the loan’s principal.  The jury heard that each loan exceeded Doughty’s lending authority, and that he issued at least $10,000,000 in senior life settlement loans without FSB’s loan committee or board approval.  With each loan, Doughty and Anderson directed $125,000.00 in “service fees” to Altus Ventures, a company under their control.  The jury heard evidence that at the time the loans were issued, the fees to Altus Ventures were not disclosed to FSB or to the borrowers taking out those loans.  In connection with the senior life settlement loans, the jury convicted Doughty of one count of misapplication of bank funds and one count of a false entry in bank records related to the concealment of the fees to Altus Ventures.

The jury also heard evidence that in January 2008, Doughty arranged a $2 million loan from FSB to Ethanol Products Group, LLC (“EPG”), a startup company in which both Anderson and Doughty had ownership interests.  Evidence showed that Doughty advanced the $2 million from FSB, above his individual lending authority, without approval by FSB’s loan committee or board.  Soon before issuing the loan, Doughty e-mailed Anderson his “cash strategy” for two other companies they controlled; the “strategy” showed all the EPG loan proceeds would be directed to companies controlled by Anderson and Doughty, ultimately diverting $100,000.00 in “officer bonuses” to Anderson and Doughty.  The jury found Doughty guilty of one count of unauthorized issuance of a loan and one count of misapplication of bank funds related to the EPG loan.

The jury heard evidence over seven days, and deliberated approximately seven hours before reaching a verdict this afternoon.  The jury acquitted Doughty on three charges.

On April 14, 2016, Anderson pleaded guilty to a one-count Information charging him with conspiring with Doughty to commit bank fraud.  As part of the plea agreement, the government agreed to dismiss at sentencing the charges against him from the indictment.  Anderson testified as a witness for the government at Doughty’s trial.  At sentencing, Anderson faces up to five years in prison and a fine of $250,000.

Doughty faces up to 30 years in prison and a fine of $1,000,000.00 for each of the ten counts of conviction.  Under federal law, each defendant will be required to pay restitution and to forfeit to the government the amount of the proceeds of the fraudulent schemes.

The convictions were announced by Mark A. Yancey, Acting United States Attorney for the Western District of Oklahoma and are the result of an investigation conducted by the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation – Office of Inspector General.  The case was prosecuted by Assistant U.S. Attorneys Chris M. Stephens and K. McKenzie Anderson.

Mohsin Raza, 51, Chantilly, Virginia, along with his wife, Humaira Iqbal, 39, Chantilly, Virginia, and her two brothers, Farukh Iqbal, 41, Chantilly, Virginia, and Mohammad Ali Haider, 33, Chantilly, Virginia, were convicted by a federal jury on charges of conspiracy to commit wire fraud affecting a financial institution and various counts of wire fraud affecting a financial institution.

The defendants were indicted on April 23, 2015.  According to court records and evidence at trial, in 2005, Raza, then employed at Bank of America, was hired by SunTrust Mortgage (STM) as a vice president tasked with opening an office in Annandale, Virginia.  Raza hired his wife, another former loan officer from Bank of America, and her brothers, Farukh Iqbal and Haider, to work as loan officers.   From 2006 until 2007, they falsified loan applications for borrowers and purchased fake tax documents to support the false loan applications.  Sun Trust Mortgage underwriters in Richmond approved the loans based in large part upon the fake documents in the files, and borrowers were given loans to buy homes that they could not afford. Continue Reading…

Gary Patton Hall Jr., 49, Tifton, Georgia, the former president and Chief Executive Officer of Tifton Banking Company (from August 2005 to June 2010) pled guilty to one count of conspiracy to commit bank fraud and one count of conspiracy to commit fraud against the United States in connection with his role in a bank fraud scheme in which he hid underperforming and at-risk loans from the bank and the FDIC.

According to facts stipulated in the plea agreement, while president and Chief Executive Officer of TBC, Mr. Hall was engaged in an ongoing scheme to mislead the bank and its loan committee about loans TBC made to local individuals and businesses.   As part of the scheme, Mr. Hall hid past due loans from the FDIC and the TBC loan committee, which resulted in the bank continuing to approve and renew delinquent loans and loans for which the collateral was lacking.   Several of the borrowers eventually defaulted on the loans, resulting in millions of dollars in losses to TBC and others. Continue Reading…