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Feds get guilty plea in bank fraud

By Marcie Geffner · Bankrate.com
Wednesday, September 12, 2012
Posted: 6 am ET

Federal law enforcement agencies have logged another guilty plea in a massive bank fraud scheme that contributed to the failure of the Bank of the Commonwealth in Virginia.

Thomas E. Arney, a 56-year-old real estate developer and restaurateur in Chesapeake, Va., has pleaded guilty to criminal charges of conspiracy to commit bank fraud, unlawful monetary transactions and making false statements, according to a government statement.

According to the statement of facts filed with his plea agreement, Arney admitted that he performed favors for insiders at the bank in exchange for preferential lending treatment and assisted insiders in concealing the extent of the bank's true financial condition by purchasing bank-owned property, officials said in a statement.

For example, Arney admitted in court that in June 2008, he purchased a condominium in Norfolk, Va., that was owned by the bank's chief executive officer Edward J. Woodard. Woodard and the bank's commercial loan officer Stephen G. Fields approved a $433,000 bank loan to Arney for the purchase of the property. 

Arney falsely represented that he intended to use the condominium as a second home, when in fact he purchased the property as a favor to Woodard and in return for preferential treatment on his bank loans. Arney said Woodard made a $52,877 profit on the sale of the condominium. Arney never made a principal payment on the loan.

He faces a maximum penalty of five years in prison each for the conspiracy and false statement counts and 10 years in prison for the unlawful monetary transactions count. Sentencing is scheduled for Dec. 3.

The guilty plea was announced in a joint statement by officials at the Federal Bureau of Investigation, Internal Revenue Service, federal Troubled Asset Relief Program and Federal Deposit Insurance Corporation.

The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, a partnership between criminal investigators and civil regulators to investigate and prosecute U.S. financial fraud cases.

Bank of the Commonwealth lost nearly $115 million from 2008 until it closed in 2011. Court records allege that the bank's failure will cost the federal government more than $260 million through the deposit insurance fund.

Follow me on Twitter: @marciegeff.

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1 Comment
Qa
October 31, 2012 at 6:26 am

very good