DEVELOPER PLEADS GUILTY TO MASSIVE BANK FRAUD

By
Education & Training TN LIC# 290452 (retired)

Tidewater Developer and Restauranteur Pleads Guilty to Massive Bank Fraud

U.S. Attorney’s Office August 24, 2012
  • Eastern District of Virginia (757) 441-6331
 

NORFOLK, VA—Thomas E. Arney, 56, of Chesapeake, Virginia, pled guilty today to engaging in a massive bank fraud scheme that contributed to the failure of the Bank of the Commonwealth.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; John Boles, Special Agent in Charge of the FBI’s Norfolk Field Office; Rick A. Raven, Special Agent in Charge of the Internal Revenue Service Criminal Investigation’s Washington, D.C. Field Office; Christy L. Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG), made the announcement after the plea was accepted by United States District Judge Raymond A. Jackson.

Today, Arney pled guilty to a three-count criminal information charging him with conspiracy to commit bank fraud, unlawful monetary transactions, and making false statements. Arney faces a maximum penalty of five years each for the conspiracy and false statement counts and 10 years in prison for the unlawful monetary transactions count when he is sentenced on December 3, 2012.

According to the statement of facts filed with his plea agreement, Arney admitted that he performed favors for insiders at the Bank of the Commonwealth 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.

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

Arney falsely represented that he intended to use the condominium located on Boush Street as a second home. In fact, Arney admitted that he purchased the condominium as a favor to Woodard and in return for preferential treatment on his loans at the bank. In his statement of facts, Arney stated that Woodard made a $52,877.45 profit on the sale of this property. Arney never made a single principal payment on the loan.

According to court records, in November 2008, the Bank of the Commonwealth sent to the Federal Reserve an application requesting approximately $28 million from the Troubled Asset Relief Program (TARP). Based on its regulator’s concerns about the health of the bank, the Federal Reserve later requested that the bank withdraw its TARP application, which the bank did.

From 2008 up to its closing in 2011, the bank lost nearly $115 million. Court records allege that the bank’s failure will cost the federal government through the deposit insurance fund in excess of $260 million.

This ongoing investigation is being conducted by the FBI’s Norfolk Field Office, IRS-CI, SIGTARP, and the FDIC-OIG. Assistant United States Attorneys Katherine Lee Martin, Melissa E. O’Boyle and Uzo E. Asonye are prosecuting the case on behalf of the United States.

The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.

President Obama established the Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.

source: FBI
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