Home / News / Foreclosure / Three Former Execs of Failed Bank Convicted in Fraud Scheme
Print This Post Print This Post

Three Former Execs of Failed Bank Convicted in Fraud Scheme

Three former executives of the Bank of the Commonwealth and a borrower were convicted by a federal jury in Norfolk, Virginia for their roles in a fraud scheme that eventually led to the bank's ""failure"":http://dsnews.comarticles/regulators-shut-down-california-and-virginia-lenders-2011-09-26 in 2011, the Office of the ""Special Inspector General for the Troubled Asset Relief Program"":http://www.sigtarp.gov/ (SIGTARP) said last week in a release.

[IMAGE]

Edward J. Woodard (former bank CEO and chairman), Stephen G. Fields (former EVP), Troy Brandon Woodard (the CEO's son and former employee), and Dwight A. Etheridge, a favored borrower, were all convicted in the scheme. All four face a maximum penalty of 30 years in prison.

[COLUMN_BREAK]

According to the release, evidence from the trial shows many of the bank's loans were funded and provided without adhering to industry standards or the bank's own internal controls, leading to a buildup of troubled loans and foreclosures by 2008.

From 2008 to 2011, Edward and Fields attempted to hide the bank's financial problems and the troubled assets by overdrawing demand deposit accounts to make loan payments, using funds from related entities to make loan payments, using change-in-terms agreements to make loans appear current, and extending new loans or additional principal on existing loans to cover payment shortfalls, SIGTARP stated.

The insiders also showed favor to troubled borrowers by providing financing so the borrowers could purchase bank-owned properties even though they were already struggling to make payments on their existing loans. By providing financing for the borrowers, the bank was able to convert a non-earning asset into an earning asset.

Edward also had the bank pay about $100,000 in invoices for the bank's Suffolk branch, but the funds were actually used for renovations at his son Troy's residence, according to SIGTARP.

Over the three year period ending in 2011, the bank lost nearly $115 million and its failure cost the Federal Deposit Insurance Corporation (FDIC) an estimated $268 million.

About Author: Esther Cho

x

Check Also

Florida Court Rules on Foreclosure Judgement, Deficiency With Complaint

The Chair of the Legal League 100 provides insights into a recent ruling that has implications for financial services attorneys in the Sunshine State.

GET YOUR DAILY DOSE OF DS NEWS

Featuring daily updates on foreclosure, REO, and the secondary market, DS News has the timely and relevant content you need to stay at the top of your game. Get each day’s most important default servicing news and market information delivered directly to your inbox, complimentary, when you subscribe.