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Home | Daily Dose | Kansas Man Pleads Guilty to TARP Bank Fraud
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Kansas Man Pleads Guilty to TARP Bank Fraud

fraud

Timothy P. Fitzgerald, 56, of Leawood, Kansas, pleaded guilty on Monday to participating in a scheme to defraud the Bank of Blue Valley, which eventually accepted approximately $21 million in troubled asset loans from the U.S. Treasury.

According to a statement released by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Barry Grissom, the U.S. Attorney for Kansas, explained that the crime cost the Bank of Blue Valley more than $877,000.

Federal officials said the financially troubled Kansas bank eventually received more than $21 million in funding from the Troubled Asset Relief Program (TARP). Christy Romero, a special inspector general for TARP, said the bank never repaid the TARP funds and also missed 18 quarterly dividend payments totaling $4.9 million owed to taxpayers.

“TARP sold its investment in the bank at a loss of a half-million dollars in principal, in addition to the missed dividend payments,” Romero said.

Grissom said Fitzgerald admitted in his plea that he defrauded the bank while he was CFO of KC United, LLC, a Kansas City, Kansas, holding company for five construction services companies.

Fitzgerald and others manipulated the quarterly financial statements of KC United, a company that was losing money, to falsely show a profit. They provided the Bank of Blue Valley with other falsified reports that the bank used to renew the company's line of credit. A cover letter saying an outside agency had reviewed the statement also was falsified, according to Grissom.

“Just as taxpayers were bailing out Bank of Blue Valley with TARP funds, Fitzgerald as the CFO of KC United, began defrauding the bank and continued the fraud for years while Treasury was a shareholder in the bank,” said Romero. “Fitzgerald gave the

bank cooked books that whitewashed KC United’s losses and concealed the red ink, a fraud which included a forged auditor signoff.”

The bank relied on these falsified documents to extend loans, and after three KC United companies filed for bankruptcy, the bank suffered large losses, according to Romero.

Grissom said Fitzgerald could face up to 30 years and a fine of $1 million. Sentencing will be set at a later time.

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About Author: Derek Templeton

Derek Templeton
Derek Templeton is an attorney based in Dallas, Texas. He practices in the areas of real estate, financial services, and general corporate transactional law. His experience includes time as an Attorney Adviser for the U.S. Small Business Administration and as General Counsel for a nonprofit organization in Dallas. A self-avowed "policy junkie," he has a keen interest in the effect that evolving federal policy has on the mortgage, default servicing, and greater housing industries.

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