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The Special Inspector General for the Troubled Asset Relief Program (SIGTARP) has announced the prosecution of four individuals in three separate cases on fraud-related charges against banks that were TARP recipients.
Michael "Sean" Davis, 43, of Crestview, Florida, was indicted on nine felony counts that include conspiracy to commit bank fraud, conspiracy to commit money laundering, making false statements to a federally insured institution, and fraudulently benefitting from a loan by a federally insured institution.
The alleged fraud on the part of Davis occurred while he was president of the Crestview, Florida-based federally insured Premier Community Bank of the Emerald Coast. According to the indictment, Davis was alleged to have caused the submission of false documents related to real estate closings in order to complete short sales from Bank of America. Also according to the indictment, Davis allegedly approved and authorized loans as president of Premier Community Bank from which he later received funds. Davis was arraigned on November 6 and is scheduled to go to trial on January 5, 2015.
"Davis stands charged in a purported scheme that caused Premier Community Bank, TARP recipient Bank of America, and Beach Community Bank to suffer losses," said Christy Romero, Special Inspector General for TARP. "SIGTARP and our law enforcement partners will aggressively investigate allegations of fraud related to TARP and ensure justice and accountability for taxpayers."
SIGTARP announced recently that Craig S. On, 62, of Berklee, California, was charged on October 30 with one count of conspiracy to make a materially false and misleading statement to an accountant. On is the former CFO of United Commercial Bank, which is based in San Francisco but has offices nationwide and in China and Taiwan.
According to SIGTARP, the TARP program provided UCB with $297 million in federal relief money in November 2008 at the height of the financial crisis. UCB was later taken over by the FDIC in November 2009.
Information released by SIGTARP alleges that On, along with others, began to manipulate UCB's financial records in order to misrepresent the bank's financial condition to auditors, thus causing the bank to issue materially false and misleading financial statements. SIGTARP said the maximum penalty, if there is a conviction, is five years in prison, a $250,000 fine, and restitution. The court will impose any sentencing after considering the U.S. Sentencing guidelines and the federal statutes that govern imposing a
SIGTARP recently announced that new charges were being brought against husband and wife Zulfikar Esmail and Shamim Esmail, both of Evanston, Illinois, for an alleged scheme to defraud TARP fund recipient First Midwest Bank as well as the U.S. Department of Treasury's Community Development Financial Institutions Fund.
The Esmails previously served on the board of directors with Wilmette, Illinois-based Premier Bank. The two were indicted last year on charges of attempting to defraud the TARP program of $6.8 million and costing the FDIC $64.1 million when Premier Bank failed in March 2012. According to the new charges, the pair was alleged to have received an $8.1 million loan from First Midwest Bank while they were on the board of directors with Premier Bank, and that Shamim Esmail obtained more than $1 million in Treasury funds that had been set aside as relief money for banks in distressed communities.
"SIGTARP special agents previously participated in the arrest of senior officers of Premier Bank, Zulfikar Esmail and his wife, Shamim Esmail, for a criminal fraud scheme and theft by deception which included charges that they allegedly used fraudulent bank records to apply and receive $6.8 million in TARP bailout funds under TARP's bank bailout, which were lost when the bank failed," Romero said. "The new charges brought allege that while Premier Bank was in TARP and taxpayers were shareholders in the bank, Shamim Esmail orchestrated a scheme to have the bank defraud another Treasury program out of millions—the CDFI Program—which was designed to promote lending in low and moderate income communities."
For allegedly obtaining of a fraudulent loan for more than $8 million from TARP fund recipient First Midwest Bank in 2009, Zulfikar Esmail was indicted on two counts of financial institution fraud and one count of loan fraud. First Midwest received $193 million in TARP relief funds in December 2008. The two were charged together in the alleged scheme to defraud First Midwest. Shamim Esmail was indicted on additional charges of theft and wire fraud for defrauding Treasury's CDFI Fund. The indictment alleges that Premier Bank received more than $1 million in funds from two programs under the CDFI Fund that were designed to provide financial aid to banks in economically distressed areas.
"As these new charges allege, the defendants fraudulently secured federal aid funds at a time when the country’s economy and its major financial institutions were on the brink of disaster," Illinois attorney general Lisa Madigan said. "Their illegal scheme ultimately resulted in the failure of the bank at a great cost to the bank’s customers and American taxpayers."
