Skip to content

Judicial Watch • TARPigreport

TARPigreport

TARPigreport

Page 1: TARPigreport

Category:

Number of Pages:518

Date Created:October 25, 2013

Date Uploaded to the Library:October 29, 2013

Tags:warrants, quarterly, SIGTARP, preferred, Updated, Bancorp, housing, transfer, Department of the Treasury, GSA, cfpb, program, treasury, Obama, ATF, State Department, FBI, White House, stock, investment, EPA, transactions, IRS, ICE, CIA


File Scanned for Malware

Donate now to keep these documents public!

  • demand_answers

See Generated Text   ˅

Autogenerated text from PDF

TRO
INSPE TOR GEN
SIGTARP
Office the Special Inspector General
for the Troubled Asset Relief Program
Advancing Economic Stability Through Transparency, Coordinated Oversight, and Robust Enforcement
Quarterly Report Congress
October 29, 2013
MISSION
SIGTARP mission advance economic stability promoting the
efficiency and effectiveness TARP management, through transparency,
through coordinated oversight, and through robust enforcement against
those, whether inside outside Government, who waste, steal abuse
TARP funds.
	
STATUTORY AUTHORITY
SIGTARP was established Section 121 the Emergency Economic
Stabilization Act 2008 EESA amended the Special Inspector
General for the Troubled Asset Relief Program Act 2009 SIGTARP Act
Under EESA and the SIGTARP Act, the Special Inspector General has the
duty, among other things, conduct, supervise and coordinate audits and
investigations any actions taken under the Troubled Asset Relief Program TARP deemed appropriate the Special Inspector General.
carrying out those duties, SIGTARP has the authority set forth Section
the Inspector General Act 1978, including the power issue subpoenas.
Office the Special Inspector General
for the Troubled Asset Relief Program
General Telephone: 202.622.1419
Hotline: 877.SIG.2009
SIGTARP@treasury.gov
www.SIGTARP.gov
This report summarizes notable SIGTARP investigations that illustrate how tone the top can breed criminally
corrupt culture. SIGTARP investigation resulted convictions against bank officers TARP-applicant Bank
the Commonwealth and co-conspirators for crimes hide past-due loans and the bank near-failure condition.
Six have been sentenced prison including the Vice President (sentenced years) and President subsidiary
(sentenced years). The CEO and another officer await sentencing. SIGTARP uncovered alleged 6-year
criminal enterprise failed Premier Bank that led indictment against its Chairman and officers/directors.
More than million TARP money was lost when Premier failed. SIGTARP found that officers failed United
Commercial Bank UCB allegedly engaged fraudulent accounting tricks conceal the bank condition
resulting criminal charges against three officers. All UCB $298 million TARP funds are lost. SIGTARP
investigation resulted prison sentences 12, and years for three senior officers failed TARP-applicant
FirstCity Bank for fraudulently tricking the loan committee into approving millions loans buyers the CEO
property, and for siphoning millions. SIGTARP investigation failed TARP-applicant Appalachian Community
Bank resulted 5-year prison sentence for the Vice President for criminal self-dealing and concealing bad loans.
SIGTARP investigation into TARP-applicant First Community Bank led the CEO being sentenced years
prison for criminally covering bad loans. SIGTARP investigation Mainstreet Bank resulted guilty plea
the CEO for lying SIGTARP about his use TARP funds purchase vacation condo days after receiving the
funds. also examine the Hardest Hit Fund, which has only spent 22% funds available for homeowners. Despite
SIGTARP recommendation, Treasury has never set goal how many homeowners will help with HHF and
instead has allowed the states decrease significantly the number homeowners they anticipate helping. hope
you find this report useful and would happy talk you further about SIGTARP important mission.
There must real consequences for breaking the law, and that why SIGTARP mission critical. Today
individuals have been sentenced prison for crimes investigated SIGTARP and its law enforcement partners,
112 individuals have been convicted and await sentencing, 154 individuals have been criminally charged and face
trial, and have been banned from their industries. Many these were senior officers their companies.
CHRISTY ROMERO
Special Inspector General
INSPE TOR GEN
Congress authorized the Office the Special Inspector General for the Troubled Asset Relief Program SIGTARP investigate, search, seize, and arrest criminal investigations related the Troubled Asset Relief
Program TARP The financial system has stabilized, but the toxic corporate culture that led the crisis and
TARP has not sufficiently changed. the core the crisis was pervasive culture institutions rampant risktaking and greed combined with significant unchecked power. SIGTARP has uncovered, stopped, and investigated
TARP-related crimes that serve important lesson learned from the crisis: that toxic corporate cultures
can serve breeding ground for criminal activity. SIGTARP will continue change corrupt culture the way best, removing those who corrupt culture, through arrests, convictions, and jail time.
Respectfully yours,
TRO
Message from the Special Inspector General
CONTENTS
Executive Summary	
Notable recent SIGTARP investigations 	
Company change culture
Section
THE OFFICE THE SPECIAL INSPECTOR GENERAL FOR THE
TROUBLED ASSET RELIEF PROGRAM	
SIGTARP Creation and Statutory Authority	
SIGTARP Oversight Activities	
The SIGTARP Organization	
Section
TARP OVERVIEW	
TARP Funds Update	
Financial Overview TARP	
Housing Support Programs	
Financial Institution Support Programs	
Asset Support Programs	
Automotive Industry Support Programs
102
161
179
Section
TREASURY APPROVED LARGE DECREASES THE ESTIMATED NUMBER HOMEOWNERS HELPED STATES THROUGH TARP HHF
PROGRAM	189
Introduction	191
States Have Spent 22% TARP Funds Available for HHF Assistance
for Struggling Homeowners 	
192
Treasury has Never Set Goal How Many Homeowners Will Help
with HHF Required that States Set Goal, Instead Approving Most
States Significant Reductions Estimates the Number Homeowners Helped	
195
Treasury Has Rejected All SIGTARP 2012 Recommendations for HHF	 197
The Majority States Have Significantly Reduced Their Estimates How
Many Homeowners They Will Help Through HHF	
198
Section
TARP OPERATIONS AND ADMINISTRATION	
TARP Administrative and Program Operating Expenditures	
Financial Agents	
257
259
260
Section
SIGTARP RECOMMENDATIONS	
271
Recommendations Regarding the Appointing Directors the Boards CPP Banks	
273
Additional Recommendations Regarding Homeowners Redefaulting
Modified Mortgages Under HAMP	
276
Recommendations Regarding Not Counting SBLF Funds TARP
 Repayments 	281
Endnotes	305
APPENDICES	 Glossary	336	 Acronyms and Abbreviations	
340	 Reporting Requirements	
343	 Transaction Detail	
347	 Debt Agreements, Equity Agreements, and Dividend/Interest Payments	 485	 HAMP Modification Statistics	
489	 Cross-Reference Report the Inspector General Act 1978	
490	 Public Announcements Audits	
491	 Key Oversight Reports and Testimony	
492	 Correspondence	494	 Peer Review Results	
510	 Organizational Chart 	
511
EXECUTIVE SUMMARY
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
The financial system has stabilized part due five years the TARP bailout,
but the toxic corporate culture that led the financial crisis and TARP has
not sufficiently changed. the core the financial crisis was pervasive culture financial institutions throughout the country rampant risk-taking and greed
combined with significant and unchecked power. SIGTARP has uncovered,
stopped, and investigated crime related TARP the banking, housing, and
securities industries. The crimes have detected serve important lesson learned from the financial crisis: that toxic corporate cultures can serve
breeding ground for criminal activity. SIGTARP, have arrested and continue arrest bankers who cultivated culture reckless arrogance, believing they were untouchable even they
broke the law. Profit chasing and aggressive expansion led risky gambles
lower quality loans that violated bank internal policies and industry rules that
CEOs were telling employees follow while also directing actions which they
knew violated the policies and rules. Culture will always less about what said
and more about what behavior allowed, encouraged, even rewarded. SIGTARP
found that some bankers lied, plain and simple. They crossed line, the line
between legally disclosing losses when their risky gambling went south, and illegally
hiding bad loans and declining bank health through criminal accounting tricks.
Some had been fraudulently masking the bank true condition even before the
financial crisis, but during the crisis, shrinking capital and increasing delinquent
loans left fraudulent bankers with nowhere hide. They sought TARP bailout
dollars have taxpayers fill the holes their fraud-riddled books. Others began
their criminal accounting tricks hide that the bank was near failure only after
taxpayers invested TARP funds what was supposed healthy bank, but
was instead one saddled with hidden, delinquent high-risk loans and insufficient
reserves cover losses. Some bankers cultivated culture self dealing,
criminally concealing that the bank was funding their luxury lifestyles, believing
they were entitled the finest money could buy, even while they curtailed lending
and foreclosed struggling homeowners.
There must real consequences for breaking the law, and that why
SIGTARP mission critical. Regulators can change the rules the road, but
some executives will try shape their cultures around loopholes, workarounds, even criminal deception. Today individuals have been sentenced prison
for their crimes investigated SIGTARP and its law enforcement partners, 112
individuals have been convicted and await sentencing, 154 individuals have been
criminally charged and face trial those charges, and individuals have been
banned from their industries.i Many these defendants were the highest levels banks companies that applied for received TARP bailout money. They
were trusted exercise good judgment and make sound decisions. However, they
abused that trust. Many times they abused that trust for their own personal benefit.
For some, change culture only happens when the corrupt person removed law enforcement agency such SIGTARP. Sometimes even arrest Criminal charges are not evidence guilt. defendant presumed innocent until proven guilty.
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
SIGTARP and subsequent conviction will not enough remove the sense
entitlement corrupt senior officer. For example, motion drafted himself
from prison, where serving his 30-year sentence for his $2.9 billion mortgage
fraud scheme that SIGTARP uncovered, former Taylor, Bean and Whitaker
Chairman Lee Farkas asked the court allow him keep his 1954 Cadillac,
which was seized fruit his crime, stating that irreplaceable, unique
asset. Fewer than 700 were ever produced, handful remain, and virtually none the condition this asset. impossible replace. The proceeds that the
Government may eventually get will never able replace this asset. 
SIGTARP investigations stand reminders that toxic corporate cultures can
serve breeding ground for crime. Our investigations should serve warning
bells for companies before their culture develops into crime. The tone comes
from the top. SIGTARP has uncovered CEOs leading and actively engaged
the fraud, enlisting subordinates carry out their schemes. These CEOs may
convince themselves that their actions are not criminally motivated, and are only
intended save the bank tough economic times. However, have found
our investigations that there slippery slope where culture crime starts
trickle down and then permeates their institutions. ineffective complacent
board directors failing oversee management properly can add the toxicity the culture enabling bank officers engage crime unchecked. These
boards are often complete shock when the bank true financial state revealed,
often when too late the closing the bank. Sometimes, directors actively
participate the crime. SIGTARP has identified and stopped crime institutions
with toxic cultures turned criminal. will continue bring justice and
accountability those who looked to, involved, TARP their crimes.
NOTABLE RECENT SIGTARP INVESTIGATIONS
Bank the Commonwealth
For years the Bank the Commonwealth operated community bank
Virginia, but that changed 2006, when the bank began aggressive expansion
led CEO and Chairman the Board Edward Woodard become billion
dollar bank three years. SIGTARP investigation with its law enforcement
partners uncovered that senior officers the bank then began culture freeflowing high-risk lending few favored borrowers, circumventing internal
policies and industry standards such reviewing the cash flow the borrower
business asking for adequate collateral. Bank officials issued $40 million
loans two developers, Eric Menden and George Hranowskyj, knowing that
the money was not used for construction, writing the word fun checks, with
bank employees joking that was the bank Eric and George. Instead using
these loans for construction development stated the loan applications,
the favored borrowers (like Eric and George) lived the high life, buying expensive
antique and collector cars, homes, vacation homes, and rental properties. Bank
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
officials did not visit the properties see any bank-financed construction was
actually completed. they had, they would have seen empty half-built shells
throughout Virginia.
The bank risky lending culture set situation where the fate the
bank was tied the fate these few favored borrowers, but the bank had not
adequately reserved absorb losses these loans, and then losses soared.
Lawyers for bank officials argued trial that when the crisis hit, effort save
the bank, bank officials responded trying help creative ways shore difficult borrowers. The convictions these bank officials confirmed what
SIGTARP investigation revealed that bank officers were not acting creatively but
rather criminally conspiracy with the favored borrowers.
Our investigation with our law enforcement partners revealed culture
deceit and corruption the bank senior officers conjured criminal scheme after
scheme with the favored borrowers hide from banking regulators who examined
the bank and its application for TARP bailout funds that the favored borrower
loans were past-due and that result, the bank was about fail. uncovered
bank officers who falsified bank records make bad loans look good, paying
past-due balances using money designated for other purposes overdrawn bank
accounts the tune hundreds thousands dollars, new loans purportedly
for new projects, and construction loans with little completed construction. investigated how senior bank officials directed the favored borrowers buy
foreclosed property off the bank books rigged auctions, bidding the price,
while disguising that the bank funded the purchase (adding more loans that
would ultimately default). One co-conspirator testified trial that his relationship
with the bank was you scratch back, will scratch yours. found that
bank officials removed more than 1,000 bad loans from the past-due report that
was presented the board each month and back-dated documents. The bank
officials defrauded customers, shareholders, and Federal regulators, and turned
taxpayers attempt get TARP funds cover the massive holes caused
fraudulent loans.
The culture the bank also involved personal greed, with bank officers
lining their own pockets top their big salaries, company cars, and generous
expense accounts. Senior bank officers approved bank loans officers and
directors, without board approval charging customary fees, including loans
CEO Woodard purchase two condos that did not require single payment,
and million loans the CEO son, Troy Brandon Woodard, who was vice
president bank subsidiary, that could try his hand for the first time
speculating real estate. Brandon Woodard enjoyed $100,000 spending spree
home renovations fraudulently billed the bank, and when could not sell his
condo, Menden and Hranowskyj bought using bank funds. Vice President and
Commercial Loan Officer Stephen Fields, who was engaged much the fraud
despite being former federal bank examiner, accepted kickbacks kitchen and
bathroom renovations from Menden and Hranowskyj.
What started out aggressive culture high-risk loans Bank
Commonwealth morphed into corrupt culture where crime took root and
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
became rampant, driving the bank into the ground. Four bank officers and six
co-conspirators including the favored borrowers have been convicted the
crimes investigated SIGTARP and its law enforcement partners; six have
been sentenced prison, with CEO Woodard and loan officer Jeremy Churchill
awaiting their sentence and two co-conspirators have been sentenced probation.
Stephen Fields was sentenced years prison followed years
supervised release; Brandon Woodard was sentenced years prison followed years supervised release. The six convicted co-conspirators including
Menden and Hranowskyj were sentenced prison for long years.
Premier Bank
SIGTARP investigation with its law enforcement partners uncovered alleged
bank fraud conspiracy that led indictment July 30, 2013, Cook
County Grand Jury Illinois against Zulfikar Esmail, the chairman Premier
Bank Wilmette, Illinois; his wife Shamim Esmail, who was the executive vice
president and general counsel; Robert McCarty, attorney and director; and
director William Brannin, for their participation until the bank failure 2012 alleged six year scheme defraud the bank and hide its poor financial condition
from state regulators.ii The scheme allegedly was ongoing when Premier sought
and received more than million TARP funds, which was lost when the bank
failed.
The indictment alleges that Zulfikar Esmail headed criminal enterprise
which the others participated. All defendants are awaiting trial but should the
allegations substantiated, the allegations misuse Esmail and the other
officers and directors laid out the indictment depict culture corruption and
greed that put personal enrichment over the interests the financial institution
and the community. Esmail, his wife who served the general counsel, and the
two bank directors allegedly conspired hide the true financial condition the
bank manipulating past-due loans through various schemes make them
appear current and using deceptive financial records obtain TARP funds. The
criminal conduct alleged the indictment describes numerous acts fraudulent
conduct including using Premier Bank for personal profit the expense the
bank and federal taxpayers. Esmail allegedly solicited bribes, including that
Esmail children given ownership interests, exchange for lending several
grocery stores Illinois. Esmail allegedly falsified contractor invoices use bank
funds pay for renovations Esmail home and rental properties including the
construction underground tunnel his home. late 2008, the charges
allege that the bank was nearing failure and applied for and received the first two
payments from Treasury connection with the bank application for TARP funds order further the criminal scheme. Criminal charges are not evidence guilt. defendant presumed innocent until proven guilty.
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
United Commercial Bank
Since the 1970s, United Commercial Bank UCB was commercial bank
headquartered San Francisco, California. Starting around 1998, UCB developed plan grow its assets more than $10 billion, part meet foreign criteria purchase bank China. UCB began expand rapidly, nearly doubling its
loan portfolio from $4.4 billion more than billion between 2004 and 2007. 2007, expanded its business and branches the United States, Taiwan,
and China. Beginning 2008, the bank had increasing past-due loans, and
September 2008, the bank looked TARP, receiving $298 million TARP funds.
SIGTARP investigation with its law enforcement partners uncovered culture excessive risk and circumvented internal controls. According allegations
Federal indictments, beginning September 2008, UCB executives, along with
others, sought hide UCB losses and deteriorating financial condition from
Treasury, investors, depositors, regulators, and the bank independent auditor.iii
SIGTARP investigation with its law enforcement partners uncovered that bank
officers allegedly engaged fraudulent accounting tricks conceal the true
financial condition the bank, and delay and avoid publicly reporting the bank
impaired loans and true loan losses. Our investigation detected that bank officers
allegedly concealed that loan collateral and repossessed assets had declined
value, fraudulently understated the risk certain loans, and fraudulently delayed
downgrading the risk ratings certain loans. uncovered that bank officers
allegedly falsified the bank books and records that they falsely described the
value the bank loan collateral and repossessed assets, and omitted material
information the likelihood that certain loans would repaid and that bank
officials caused the bank issue materially false and misleading public statements
and reports regarding its financial condition. Our investigation revealed that bank
officials allegedly lied and misled the bank outside auditor. November 2009,
UCB failed the first TARP bank fail resulting complete loss taxpayers 
$298 million TARP investment.
SIGTARP investigation resulted criminal charges against Ebrahim
Shabudin, the bank chief credit officer and chief operation officer, Thomas Yu, senior vice president and manager credit risk and portfolio management,
and Lauren Tran, vice president and the manager credit policy the bank.
The SEC filed civil charges against CEO Thomas Wu, Shabudin, Yu, and CFO
Craig On.
FirstCity Bank
Georgia-based FirstCity Bank pursued rapid growth strategy driven largely
loans real estate developers, with the bank assets growing nearly 80% between
December 2005 and 2008. SIGTARP investigation with its law enforcement
partners revealed that the bank culture was one deception, greed, self-dealing,
and abuse power. CEO, Chairman, and President Mark Conner and senior
loan officer Clayton Coe tricked FirstCity loan committee into approving several
iii Criminal charges are not evidence guilt. defendant presumed innocent until proven guilty.
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
multi-million dollar real estate loans borrowers who, unbeknownst the loan
committee, were actually buying property owned Conner his co-conspirators.
Conner siphoned off millions dollars from fraudulent commercial real estate
loans, ultimately driving FirstCity failure. Despite his fiduciary duties
president, CEO, and chairman, for years, Conner went great lengths lie
bank regulators, cheat the bank, and steal millions dollars. help fund FirstCity aggressive loan growth, Conner engineered loan
participation deals with other banks make larger loans, drawing other banks into
his bad deals. Conner and his co-conspirators caused least other federally
insured banks invest (participate in) fraudulent loans based fraudulent
misrepresentations, shifting all part the risk default the other banks.
Some these banks later failed.
Conner himself pocketed million. 2008, when FirstCity was hit
significant losses due fraud and poor risk decisions, Conner attempted
unsuccessfully get million TARP bailout cover his tracks. effort make FirstCity financial position look much better than really was, Conner
and his co-conspirators tried unload bad loans and foreclosed homes straw
purchasers, with the bank loaning them the money for the purchases. Even after
the bank failure, Conner deceit continued. Knowing was under investigation SIGTARP, Conner left the country and filed for personal bankruptcy, testifying
under oath that was down less than nothing. truth, Conner controlled
more than $4.5 million offshore cash and investments that tried hide. result SIGTARP investigation, Conner was sentenced years prison for his crimes, followed years supervised release; Clayton Coe
was sentenced years months behind bars followed years supervised
release. The bank lawyer, Robert Maloney, was sentenced years months
prison for bank fraud based his disguising the transactions and funneling bank
funds Conner keep other bank loans current. All three were banned for
life from working the banking industry. SIGTARP found storage unit rented
Maloney name containing artwork and furniture owned Conner worth more
than $89,000, including 19th Century European oil paintings, bronze sculptures,
antique furniture, and pair gilt bronze candelabra worth $8,000. SIGTARP
seized the contents the storage unit.
Appalachian Community Bank
TARP-applicant Appalachian Community Bank was forced close its doors
March 19, 2010, large part because high level executives that used the bank their own personal piggy bank, committing numerous frauds that contributed the bank failure. The culture the bank was one greedy endeavors
bank officers hide bad loans and enrich themselves. Starting 2006, the bank
aggressively expanded operations and opened new branches increasing total loans
(heavily concentrated construction and development loans) from $457 million 2005 $812 million 2008. The FDIC Inspector General found that the
bank grew larger and more risky, management continued run like smaller,
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
less complex institution. Bank officials had shoddy underwriting, making loans that
violated loan-to-value limits and without current appraisals.
SIGTARP, together with its law enforcement partners, uncovered extensive
criminal fraud senior bank officials that started 2007, well before the bank
applied for TARP. its aggressive expansion, senior bank officials created culture insider self-dealing using their positions the bank perpetuate their frauds
and unjustly enrich themselves. SIGTARP uncovered that bank officials caused the
bank make loans straw borrower, disguising from the bank loan committee
that the money actually went the bank officials purchase land they would
immediately flip higher price. Our investigation disclosed that further this
fraud, bank officials wire-transferred funds purchase real estate, which caused bank account the officials controlled overdrawn millions dollars, but
the bank officials never recorded the bank records. Bank officials authority
execute the transfers was never questioned the board. Additionally, bank officials
used shell corporations purchase two Florida condominiums financed the
bank. Approximately two months later, bank officials refinanced their mortgages
and pocketed more than $875,000 that they used for personal purposes.
Subsequently, when the market took downturn, the bank faced ever increasing
losses that they could not cover. Having already turned culture risky lending criminal self-dealing, bank officials added their criminal culture. SIGTARP
investigation uncovered that order prevent the FDIC from discovering the
growing past due loans Appalachian books, bank officials arranged number sham real estate transactions, with the intent make appear coconspirator had purchased properties from the bank foreclosure inventory
and was making regular monthly payments the new mortgages. Bank officials
used shell companies they controlled called GPH Investments God Please Help
and PHL Investments Please Help Lord hide past-due loans and growing
inventory foreclosed property directing the bank finance sales the
properties the GPH Investments and PHL Investments.
Former bank vice president Adam Teague was sentenced years prison.
Former vice president William Beamon has been charged with bank fraud
alleged scheme divert funds from the bank related foreclosed property held
the bank.iv
First Community Bank
Louisiana-based First Community Bank had culture that gave carte blanche
authority its CEO and President Reginald Harper. The bank board trusted
Harper completely and even increased CEO Harper authority, Harper
request, make decisions new loans half million dollars. CEO
Harper abused the board trust. Harper provided more than million loans
subdivision developer Troy Fouquet and made sure that the loans were different
quantities and different names using Fouquet-controlled companies, that
Harper could sign off the loans himself without board approval. Prior the Criminal charges are not evidence guilt. defendant presumed innocent until proven guilty.
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
financial crisis, Fouquet could not find buyers for homes built repay the
loans.
SIGTARP investigation revealed that CEO Harper turned culture
unchecked CEO power into one fraud hide the fact that Fouquet loans
were going bad. SIGTARP investigation uncovered that Harper devised various
cover-up schemes hide the bad loans from bank records that used apply for
TARP, which would have filled the hole caused Fouquet bad loans. Treasury
approved the TARP application but was later withdrawn the bank board who
was unaware the holes the book records caused the fraud. found
that Harper accepted checks from Fouquet that knew would bounce and held
the checks limbo the bank cash items bucket and falsified bank records
reflect the payment having been made. found that Harper and Fouquet used
straw borrowers take out new loans from the bank, the proceeds which were
used pay Fouquet past-due loans. The judge who sentenced Harper years prison followed years supervised release and sentenced Fouquet years prison followed years supervised release told Harper that this was not onetime lapse judgment mistake, but cover-up for years. their sentencing, director told the court how Harper had violated their trust. The losses from the
fraud contributed the bank being taken over another bank.
Mainstreet Bank (Calvert Financial)
The culture Missouri-based Mainstreet Bank best evidenced the bank use the TARP money that its parent company Calvert Financial Corporation received
and downstreamed Mainstreet Bank. This was bank where the tone certainly
came from the top. The top was Darryl Woods, who was the chairman and CFO
Mainstreet Bank and the chairman, president and majority shareholder Calvert. was Woods who looked TARP, signing the TARP application and TARP
documents. SIGTARP investigation revealed that the time Woods applied for
TARP had already been negotiating buy Florida waterfront condo. Within
days receiving the TARP funds, Woods directed the bank spend more than third the funds purchase the condo for his and other executives vacations.
Our investigation revealed that eight days after the bank used TARP funds buy
the condo, Woods lied response SIGTARP survey the bank asking for
description how used TARP funds omitting that TARP funds were used
purchase the vacation condo, which had taken place just days before. result
SIGTARP investigation with its law enforcement partners, Woods pled guilty
making the false statement SIGTARP. awaits sentencing. addition, will banned from banking.
COMPANY CHANGE CULTURE
Law enforcement but one effective method change corrupt culture
institution, but the time are investigating, often too late change
culture. fully address the corporate culture that led TARP, companies must
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
change from within. They must adopt culture vigilance, with strong board
and management oversight one that curbs risk and greed the point where
the company can absorb its own losses without coming taxpayers hat hand
again. Companies must not only commit following policies and rules, CEOs
and other senior officials must themselves the example following policies
and rules, and must recognize and reward employees that adhere company
policies and industry rules and demonstrate accountability and integrity. And
companies are honest with themselves, they may just admit that good starting
point change culture executive pay. Excessive executive pay far too routine spite corporate scandals and continued losses. One immediate change
culture that companies can make change risk-based compensation that
discourages reckless risk-taking and ties personal success the long-term success the company. Through changes compensation and rewarding compliance with
rules and internal policies, the best change corporate culture that companies can
make post-crisis focus personal accountability. Although our jurisdiction
narrow, SIGTARP will continue change corrupt culture and bring personal
accountability the way best, removing those who corrupt culture,
through arrests, convictions, jail time, and industry bans.
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
SECT
THE OFFICE THE SPECIAL
INSPECTOR GENERAL FOR THE
TROUBLED ASSET RELIEF PROGRAM
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
SIGTARP CREATION AND STATUTORY AUTHORITY
The Office the Special Inspector General for the Troubled Asset Relief
Program SIGTARP was created Section 121 the Emergency Economic
Stabilization Act 2008 EESA amended the Special Inspector General
for the Troubled Asset Relief Program Act 2009 SIGTARP Act Under EESA
and the SIGTARP Act, SIGTARP has the responsibility, among other things,
conduct, supervise, and coordinate audits and investigations the purchase,
management, and sale assets under the Troubled Asset Relief Program TARP deemed appropriate the Special Inspector General. SIGTARP required report quarterly Congress describe SIGTARP activities and provide
certain information about TARP over that preceding quarter. EESA gives SIGTARP
the authorities listed Section the Inspector General Act 1978, including
the power obtain documents and other information from Federal agencies and subpoena reports, documents, and other information from persons entities
outside the Government.
Under the authorizing provisions EESA, SIGTARP carry out its duties
until the Government has sold transferred all assets and terminated all insurance
contracts acquired under TARP. other words, SIGTARP will remain watch long TARP assets remain outstanding.
SIGTARP OVERSIGHT ACTIVITIES
SIGTARP continues fulfill its oversight role multiple parallel tracks:
investigating allegations fraud, waste, and abuse related TARP; conducting
oversight over various aspects TARP and TARP-related programs and activities
through published audits and evaluations, and 128 recommendations
September 30, 2013, and promoting transparency TARP and the Government
response the financial crisis relates TARP.
SIGTARP Investigations Activity
SIGTARP white-collar law enforcement agency. September 30, 2013,
SIGTARP had more than 150 ongoing criminal and civil investigations, many
partnership with other agencies order leverage resources. SIGTARP takes its
law enforcement mandate seriously, working hard deliver the accountability the
American people demand and deserve. SIGTARP investigations have delivered
substantial results, including:
 	 criminal chargesi against 154 individuals, including senior officers (CEOs,
owners, founders, senior executives) their organizations
 	 criminal convictions 112 defendants
 	 prison sentences for defendants (others are awaiting sentencing) Criminal charges are not evidence guilt. defendant presumed innocent until and unless proven guilty.
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
FIGURE 1.1
CRIMINAL CHARGES FROM
SIGTARP INVESTIGATIONS
RESULTING PRISON
SENTENCES
14%
26%
11%
14%
19%
Conspiracy Commit Fraud
Bank Fraud
Wire and Mail Fraud
 	 civil cases and other actions against individuals (including senior officers)
and entities (in some instances individual will face both criminal and civil
charges)
 	 orders temporarily suspending permanently banning individuals from
working the banking financial industry, working contractor with the
Federal Government, working licensed attorney
 	 orders restitution and forfeiture and civil judgments and other orders
entered for $4.68 billion. This includes restitution orders entered for $4.2
billion, forfeiture orders entered for $233.1 million, and civil judgments and
other orders entered for $288 million. Although the ultimate recovery
these amounts not known, SIGTARP has already assisted the recovery $185.6 million. These orders happen only after conviction and sentencing civil resolution and many SIGTARP cases have not yet reached that stage;
accordingly, any recoveries that may come these cases would serve increase
the $185.6 million
 	 savings $553 million TARP funds that SIGTARP prevented from going
the now-failed Colonial Bank
False Statements and Entries
State Charges (Conspiracy collect
upfront fees/commit grand theft)
Loan Fraud
Alteration records
Other
SIGTARP investigations concern wide range possible wrong-doing,
and result charges including: bank fraud, conspiracy commit fraud
defraud the United States, wire fraud, mail fraud, making false statements the
Government (including SIGTARP agents), securities fraud, money laundering,
and bankruptcy fraud, among others.ii
Figure 1.1 represents breakdown criminal charges from SIGTARP
investigations resulting prison sentences. Although the majority SIGTARP
investigative activity remains confidential, over the past quarter there have been
significant public developments several SIGTARP investigations, described
below.
TARP-Related Investigations Activity Since the July 2013 Quarterly
Report
Two Bank Executives and Virginia Developer Sentenced Federal Prison for
Roles Massive Bank Fraud Scheme Bank the Commonwealth September and October 2013, three four defendants were sentenced
Federal prison after jury convicted all four fraud charges relating their roles $41 million bank fraud scheme that masked non-performing assets Bank the Commonwealth BOC and contributed the failure BOC 2011.
The fourth defendant, Edward Woodard, the bank former chief executive
officer, president, and chairman the board, scheduled sentenced
November 2013. September 16, 2013, Stephen Fields, former executive
vice president and senior commercial loan officer, was sentenced 204 months Federal prison, followed five years supervised release. was also ordered The prosecutors partnered with SIGTARP ultimately decide which criminal charges bring resulting from SIGTARP investigations.
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013 forfeit $61.6 million and pay $332 million restitution, jointly with the
other co-defendants. September 30, 2013, Troy Brandon Woodard, the son
Edward Woodard and the former vice president and mortgage loan specialist
subsidiary BOC, was sentenced months Federal prison followed five
years supervised release. was also ordered pay $2.4 million restitution
and forfeit $4.3 million part the joint restitution and forfeiture orders.
September 18, 2013, Dwight Etheridge, favored BOC borrower who owned
and operated residential and commercial development company, was sentenced months Federal prison, followed five years supervised release.
Etheridge was also ordered pay million part the joint restitution order.
Previously, July 22, 2013, Thomas Arney, who pled guilty the case, was
sentenced months Federal prison, followed three years supervised
release. was also ordered pay million restitution part the joint
restitution order and forfeit $7.5 million and substantial amount personal
property and real estate.
BOC was community bank headquartered Norfolk, Virginia, that failed September 2011. was the eighth largest bank failure the country that year
and the largest bank failure Virginia since 2008. The Federal Deposit Insurance
Corporation FDIC estimates that BOC failure will cost the deposit insurance
fund more than $268 million. November 2008, BOC sought $28 million
TARP funds. Subsequently, BOC Federal banking regulator asked the bank
withdraw the TARP application, which BOC did.
From 2005 2009, BOC more than doubled its assets, largely through
brokered deposits, financial tool that allows investors pool their money and
receive higher rates returns. Because the high volatility these deposits,
institution must remain well-capitalized accept and renew brokered deposits.
BOC funded and administered many loans during this period without following
industry standards the bank own internal controls, and 2008, the volume the bank troubled loans and foreclosed real estate soared. From 2008
2011, BOC executives used various methods fraudulently mask the bank true
financial condition out fear that the bank declining health would negatively
impact investor and customer confidence and affect the bank ability accept and
renew brokered deposits. fraudulently hide BOC troubled assets, the bank insiders overdrew demand
deposit accounts make loan payments, extended new loans additional
principal existing loans cover payment shortfalls, changed the terms loan
agreements make loans appear current, and used funds from related entities
(sometimes without authorization from the borrower) make loan payments. addition, the BOC executives hid millions dollars non-performing loans
from the bank board directors. The BOC executives also provided preferential
treatment troubled borrowers, including Etheridge and others, purchase
defaulted property. The borrowers were already having difficulty making payments their existing loans and the financing allowed the borrowers convert these
non-earning assets into earning assets. some instances, these new loans
exceeded the purchase price the property, which resulted the borrowers
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
obtaining cash closing that they used make payments their other loans the bank and for their own personal purposes. addition, BOC executives
caused the bank fund loans troubled borrowers purchase attempt
purchase properties owned Edward Woodard and Troy Brandon Woodard. BOC
subsequently charged off million these loans loss. addition, Edward
Woodard and Troy Brandon Woodard caused BOC pay fraudulent invoices
for construction costs for bank branch when the true costs were incurred for
renovations Troy Brandon Woodard personal residence.
Also convicted the case was Jeremy Churchill, BOC vice president
and commercial loan officer, who pled guilty conspiracy commit bank fraud.
Churchill admitted that submitted loan requests BOC provide more than million companies owned Etheridge. BOC subsequently fully charged
off these million loans loss. Churchill also admitted requesting that
BOC provide $4.1 million loan Etheridge company used purchase incomplete condominium project Virginia Beach from the owners who were
delinquent their loan the bank. Churchill admitted that and Fields used
approximately half the loan proceeds pay down the underlying loan the
property. Churchill faces maximum penalty five years prison when
sentenced November 2013. Also, July 2013, Recardo Lewis, former
vice president Etheridge construction company, was sentenced six months
home detention and five years probation for his role the fraud scheme. Lewis
was also ordered pay $855,962 restitution well million forfeiture, part the restitution and forfeiture orders issued. Lewis previously pled guilty conspiracy defraud BOC submitting fraudulent draws the incomplete
condominium project Virginia Beach.
Also, September 2012 and October 2012, business partners Eric H.Menden
and George Hranowskyj, respectively, were sentenced prison for their roles the bank fraud scheme. Menden was sentenced 11.5 years Federal prison
followed three years supervised release. Hranowskyj was sentenced
years Federal prison followed three years supervised release. Menden and
Hranowskyj were ordered pay $32.8 million restitution and forfeit $43.5
million part the joint restitution and forfeiture orders. January 25, 2012,
Natallia Green, former employee Menden and Hranowskyj, was sentenced
five years probation and was ordered pay $106,519 restitution after pleading
guilty making false statement BOC loan application. August 10,
2011, Maria Pukhova, another former employee Menden and Hranowskyj, was
charged with making false statement loan application BOC April 2010.
Pukhova case pending.
This case being investigated SIGTARP, the U.S. Attorney Office for the
Eastern District Virginia, the Federal Bureau Investigation FBI Internal
Revenue Service Criminal Investigation IRS-CI the Securities and Exchange
Commission SEC the Federal Deposit Insurance Corporation Office
Inspector General FDIC OIG and the Office the Inspector General-Board
Governors the Federal Reserve System FRB OIG
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
Chairman and Senior Executives TARP Recipient Bank Charged Criminal
Fraud Scheme Premier Bank August 2013, four former members the board directors and senior
executives TARP recipient Premier Bank Premier Wilmette, Illinois, were
charged Cook County, Illinois, with operating alleged long-running criminal
scheme that caused the failure the bank. Premier failed March 23, 2012.
result the scheme, the charges also allege that Treasury was defrauded nearly
$6.8 million TARP funds. All four defendants were arrested July 10, 2013,
SIGTARP agents and its law enforcement partners.
Zulfikar Esmail, former chairman the board directors; his wife, Shamim
Esmail, former executive vice president and general counsel; Robert McCarty,
attorney and former member the board; and William Brannin, former member the board, were all charged for their alleged roles the scheme. All four
defendants are charged with financial institution fraud, continuing financial
crimes enterprise, conspiracy commit financial crime and theft deception. addition those crimes, Zulfikar Esmail also charged with organizer
financial crimes enterprise and commercial bribery financial institution.
According the indictment, the defendants allegedly hid the bank rapidly
declining financial condition from regulators beginning 2006 until its failure
2012 repeatedly submitting allegedly materially false financial reports. late
2008, the charges allege that the bank was nearing failure and applied for and
received the first two payments from Treasury connection with the bank
application for TARP funds order further the criminal scheme. cover
the true condition the bank, purportedly money from third parties was used
make payments several loans that were past due, including payments from
limited liability corporation owned part the Esmails children. also alleged
that Zulfikar Esmail solicited and demanded bribes from local businesspeople
and demanded ownership stakes for his children customers businesses
exchange for loans and lines credit. also alleged that Zulfikar Esmail ordered
construction and improvement work done his home and rental properties that owned and that the contractor prepare invoices that fraudulently showed the
work was done the bank order bill the bank for the work. The estimated
cost the FDIC result the bank failure $64.1 million.
This case being investigated SIGTARP, the Office the Attorney General
for the State Illinois, and the FDIC OIG.
TARP Recipient Bank America Liable for Defrauding the United States Bank America, Countrywide, and Rebecca Mairone October 23, 2013, after four-week trial and one day deliberation, Federal
jury Manhattan found Bank America Corporation and its predecessors,
Countrywide Financial Corporation and Countrywide Home Loans, Inc.
(collectively, Bank America liable for defrauding the United States, namely
the Federal National Mortgage Association Fannie Mae and the Federal Home
Loan Mortgage Corporation Freddie Mac selling thousands defective
loans them.
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
The jury also found Rebecca Mairone, former senior executive from
Countrywide, liable for defrauding the United States connection with her role
the fraudulent scheme. Civil penalty amounts will determined the court
later date.
Fannie Mae and Freddie Mac are government sponsored entities GSEs
that were chartered Congress provide liquidity and stability the U.S.
housing and mortgage markets. fulfill their mission, the GSEs purchase singlefamily residential mortgages from lenders and pool them into mortgage-backed
securities (which they subsequently sell investors) hold the mortgages their
investment portfolios. ensure that they purchase investment quality mortgages,
the GSEs rely representations and warranties the lenders that the loans sold the GSEs comply with certain underwriting standards. civil fraud lawsuit filed the U.S. Attorney for the Southern District
New York against Bank America and Mairone, the complaint alleged that the
defendants caused U.S. taxpayers losses through the sale toxic mortgage loans
Fannie Mae and Freddie Mac. The complaint sought civil penalties and damages
more than billion.
For many years Countrywide, its own and part Bank America,
was the largest provider residential mortgage loans the GSEs. 2007,
Countrywide allegedly created new loan origination program called the High
Speed Swim Lane Hustle increase the speed which originated and sold
loans the GSEs. Around this same time, mortgage default rates were increasing
throughout the country and, response, the GSEs began tighten their loan
purchasing requirements reduce risk. Under the Hustle, Countrywide executives
eliminated certain internal quality control processes and fraud prevention measures
that had been place ensure that its loans were sound. Countrywide executives
ignored repeated warnings that the quality loans originated under the Hustle
would suffer. result the Hustle program, Bank America funneled loans the GSEs while misrepresenting the GSEs that the loans were investmentquality loans that complied with GSE underwriting requirements. After the Hustle
loans defaulted, Bank America refused repurchase Hustle loans reimburse
the GSEs for losses incurred those loans, even where the GSEs identified loans
containing material defects fraudulent misrepresentations.
Bank America received total $45 billion, three infusions, TARP
funds 2008 and 2009. Bank America repaid the $45 billion TARP investment full December 2009.
The case was investigated SIGTARP, the Commercial Litigation Branch
the U.S. Department Justice Civil Division, the U.S. Attorney Office for the
Southern District New York, and the Federal Housing Finance Agency Office
Inspector General.
Bank Chairman Admits TARP Funds Used Purchase Luxury Vacation Property
 Darryl Layne Woods August 26, 2013, Darryl Layne Woods, the former chairman, president,
and majority shareholder Calvert Financial Corporation Calvert the bank
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
holding company for Mainstreet Bank Mainstreet pled guilty Federal court Jefferson City, Missouri, misleading Federal investigators about his use
TARP funds. Woods also served the chairman and chief financial officer
Mainstreet. part his plea agreement, Woods also agreed ban from any
future involvement any banking activities, including but not limited serving officer, director, employee, affiliated party any financial institution
agency. sentencing, Woods faces one year Federal prison, fine
$100,000, and restitution. January 2009, Calvert received $1,037,000 through the TARP Capital
Purchase Program. Woods admitted that February 2009, used $381,487 the TARP funds received Calvert purchase luxury seaside condominium Ft. Myers, Florida. February 2009, part its oversight function, SIGTARP
sent letters various financial institutions seeking specific information
how TARP funds were used each institution. president Calvert, Woods
responded SIGTARP Use Funds Survey letter dated February 10,
2009, and did not disclose the purchase the condominium. part his plea
agreement, Woods admitted that, his letter SIGTARP, failed disclose
that significant portion the TARP funds had been used purchase luxury
property, material misrepresentation relating the true use the TARP funds.
Figure 1.2 shows the building which Woods purchased the condominium.
This case being investigated SIGTARP, the U.S. Attorney Office for the
Western District Missouri, the FBI, and FRB OIG.
Former Bank Senior Officer and TARP Bank Settle with the SEC Over Fraud
Action Anchor Bancorp Wisconsin August 14, 2013, Anchor BanCorp Wisconsin, Inc. Anchor and its former
chief financial officer, Dale Ringgenberg, agreed settlement with the SEC charges that Anchor and Ringgenberg intentionally recklessly made material
misstatements Anchor quarterly report for the period ending June 30, 2009,
which was required filed with the SEC. Anchor received $110 million
TARP funds October 2008.
The SEC complaint filed Federal court the District Columbia alleged
that Ringgenberg took, failed take, actions keep from having correct
earnings that Anchor had already released its shareholders. Ringgenberg
manipulated estimate offset accounting adjustment required Anchor
external auditors. also refused failed properly account for real estate
appraisals and related information that was available after the quarter closed but
before Anchor filed its quarterly report. part the settlement, Ringgenberg
barred from serving officer director public company for five years and
will pay civil penalty $75,000. The settlement subject the approval the
court.
Treasury has realized loss $104 million its $110 million TARP principal
investment Anchor and has recouped the remaining million pursuant
 pre-packaged Chapter bankruptcy reorganization that Anchor entered
August 13, 2013, and completed September 27, 2013.
FIGURE 1.2
Photo Florida building which senior executive TARP bank Calvert Financial purchased luxury
condominium.
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
This case was investigated SIGTARP, SEC, the U.S. Attorney for the
Western District Wisconsin, and the FBI.
California Attorney Sentenced Seven Years Federal Prison for Obstructing
Investigation into $22 Million Ponzi Scheme David Tamman September 23, 2013, David Tamman, lawyer who was partner the Nixon
Peabody law firm, was sentenced seven years Federal prison followed three
years supervised release and was ordered pay $2,500 fine for his role
obstructing two separate investigations into fraudulent $22 million Ponzi scheme.
Tamman was also suspended from practicing law the state bar California and
has been banned from appearing before the SEC. November 13, 2012, after two-week criminal trial Federal court Los
Angeles, California, Tamman was convicted counts relating his role the
Ponzi scheme perpetrated his client, New Point Financial Services, Inc., New
Point and its owner, John Farahi. Tamman was convicted conspiring with
Farahi obstruct the SEC investigation into Farahi illegal Ponzi scheme (i)
altering, creating, and backdating documents make falsely appear the SEC
that Farahi and New Point had made all the necessary disclosures investors and
that Farahi had properly transferred investor funds his personal accounts and
(ii) aiding and abetting Farahi providing misleading and evasive testimony under
oath the SEC. Tamman also was convicted being accessory after the fact Farahi mail and securities fraud crimes. Tamman sentencing hearing, the
court found that Tamman additionally altered documents that caused the National
Association Securities Dealers (now known FINRA) close investigation,
lied federal investigators, gave false testimony trial, and lied probation
officer who was preparing pre-sentence report after was found guilty. previously reported, Farahi, former investment fund manager and radio
personality, was sentenced March 18, 2013, 120 months Federal prison
followed three years supervised release for his role the $20 million
fraudulent Ponzi scheme that perpetrated through his investment firm New
Point. Farahi was also ordered pay more than $22 million restitution
victims. Farahi previously pled guilty June 2012, running the Ponzi
scheme through New Point from 2005 through 2009. Farahi admitted bilking
investors falsely promising purchase corporate bonds backed TARP. Farahi
also admitted that used investor money support his lavish lifestyle, make
payments previous New Point investors order continue the Ponzi scheme,
and finance and cover trading losses speculative options trades. Facing
massive trading losses the end 2008, Farahi borrowed millions dollars from
TARP recipients Bank America and U.S. Bank (and other banks) providing
false financial information these banks.
This case was investigated SIGTARP, the U.S. Attorney Office for the
Central District California, and the FBI.
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
Over $17 Million Seized From Estate Former CEO TARP Bank One Bank
Trust July 12, 2013, $17.9 million life insurance benefits, several bank accounts,
and five vehicles were seized connection with SIGTARP civil forfeiture
investigation Layton Stuart, the former CEO One Bank Trust Little
Rock, Arkansas One Bank Layton Stuart was the former owner One
Financial Corporation One Financial the holding company for One Bank.
October 2008, One Financial applied for $10 million TARP funds. The request
was later amended and increased $17.3 million. June 2009, One Financial
received the requested $17.3 million TARP funds. September 2012, Stuart
was officially terminated from functioning any capacity One Bank its board directors result order the Office the Comptroller the Currency OCC Layton Stuart passed away March 26, 2013.
The civil forfeiture complaint filed Federal court Little Rock, Arkansas,
seeks the forfeiture the proceeds financial transactions connection with bank fraud and money laundering scheme allegedly committed Stuart and
others. The alleged scheme began 2008 and ran until 2012 when Stuart
was terminated chief executive officer One Bank. The complaint alleges
that Stuart diverted almost million the TARP money for his personal
use. Specifically, more than million TARP funds went pay Federal and
state taxes owed Stuart. Stuart allegedly ensured the transactions would
undetected disguising the payments associated with bank account known
the Interdepartmental Account. The remaining money was diverted into another
bank account allegedly controlled Stuart. The complaint was filed against the
property, alleging that the assets were traceable proceeds from the bank fraud
and money laundering scheme.
This case being investigated SIGTARP, the U.S. Attorney Office for the
Eastern District Arkansas, the FBI, IRS-CI, and OCC.
Car Dealership Owner Pleads Guilty Defrauding Bank Tariq Khan September 2013, Tariq Khan pled guilty bank fraud Federal court
Chicago, Illinois, for defrauding Old Second National Bank Old Second Old
Second Bancorp, Inc., the parent company Old Second, received $73 million
TARP funds January 2009.
Khan, the owner Urban Motors Corporation Urban Motors car and
motorcycle dealership, secured line credit through Old Second. The proceeds the line credit were used purchase used vehicles for resale. The
proceeds from the sale each vehicle were then applied against the loan
balance. Additionally, Urban Motors was provide the bank with the titles the
vehicles acquired for resale. Urban Motors agreed update this information necessary and provide the bank with certain financial reports that would
accurate. Old Second relied these reports when making decisions regarding the
line credit.
Khan admitted that from December 2008 through November 2009, failed
notify Old Second that Urban Motors sold specific vehicles, failed pay the loan
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
amounts corresponding those vehicles, and caused reports prepared that
contained misrepresentations about the status those vehicles. Khan also failed
provide Old Second with the titles certain vehicles that Urban Motors could
sell those vehicles without notifying the bank the sales. These actions allowed
Urban Motors avoid paying off the principal balance the specific vehicle sold well keep the proceeds from the sales. result the scheme, Khan
obtained $357,268 without applying those funds against the amount owed the
line credit. Khan also admitted that made misrepresentations bank auditors
about the status particular vehicles that the bank would continue permit
Urban Motors access its line credit. sentencing December 20, 2013, Khan faces years Federal
prison, fine million, and restitution. result his plea, Khan
prohibited from participating the affairs any financial institution insured
the National Credit Union Share Insurance Fund the FDIC for years.
This case being investigated SIGTARP, the U.S. Attorney Office for the
Northern District Illinois, and the FBI.
Missouri Businessman Sentenced Federal Prison for Role $2.8 Million Bank
Fraud Scheme Against Two TARP Banks Clint Dukes August 29, 2013, Clint Dukes was sentenced Federal court Kansas
City, Missouri, for his role bank fraud scheme that caused three banks,
including two TARP-recipient banks, lose more than million. Clint Dukes
was sentenced months Federal prison followed five years supervised
release, and ordered pay $2.1 million restitution the victim banks U.S.
Bank, Equity Bank (formerly First Community Bank), and First Central Bank. U.S.
Bancorp Minneapolis, the parent company U.S. Bank, received $6.6 million TARP funds and has since repaid the funds. First Community Bancshares, Inc.,
the parent company First Community Bank, received $14.8 million TARP
funds that remains outstanding. Brandi Dukes, the former wife Clint Dukes,
was sentenced five years probation and ordered pay $14,181 restitution
jointly with Clint Dukes Equity Bank. previously reported, November and December 2012, Clint Dukes and
Brandi Dukes, respectively, pled guilty for their roles the bank fraud scheme.
Clint Dukes was convicted bank fraud and Brandi Dukes was convicted
misprision felony. Clint Dukes, owner Dukes Auto Repair, admitted
creating false invoices and contracts from the state Missouri order obtain
approximately million loans from U.S. Bank, First Community Bank, and
First Central Bank from 2004 2011. Brandi Dukes worked the bookkeeper
for his auto repair shop. Brandi Dukes admitted concealing her then-husband
fraud submitting fraudulent disbursement request and authorization First
Community Bank. Through his fraudulent scheme, Clint Dukes caused losses
totaling more than million U.S. Bank, First Community Bank, and First
Central Bank.
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
This case was investigated SIGTARP, the U.S. Attorney Office for the
Western District Missouri, the FBI, and the Higginsville, Missouri, Police
Department.
Perpetrator Mortgage Lending Scheme Pleads Guilty $5.3 Million Fraud 
Steven Pitchersky September 23, 2013, Steven Pitchersky pled guilty Federal court
Philadelphia, Pennsylvania, wire fraud for his role fraudulent mortgage
lending scheme that caused TARP recipient Ally Bank, previously known GMAC
Bank, lose approximately $5.3 million. sentencing December 19, 2013,
Pitchersky faces years Federal prison and $250,000 fine. Pitchersky
also agreed pay $3.6 million restitution.
Pitchersky, who operated Nationwide Mortgage Concepts NMC admitted running fraudulent mortgage lending scheme through NMC. NMC was mortgage lender licensed more than states originate and refinance
mortgages. NMC participated several Federal housing programs sponsored
the United States Department Veterans Affairs and Federal Housing
Administration FHA and was authorized originate and FHA mortgages. November 2009, Pitchersky obtained $10 million line credit from Ally. From
August 2009 through January 2011, NMC used Ally line credit refinance
mortgages, including mortgages held TARP recipient banks Bank America
and Wells Fargo. part the agreement provide the line credit, Ally retained security interest the mortgage loans until the loans were repaid. most cases,
Ally also purchased the NMC refinanced mortgages. his application for the
line credit from Ally, Pitchersky falsely stated that already had $10 million
line credit with independent company called MPL; however, MPL was run Pitchersky. Ally approved the $10 million line credit Pitchersky. Also, Ally
funds provided NMC were required through third-party settlement agent
that would then disburse the funds for each NMC loan financed Ally. part the fraud scheme, Pitchersky used company that created called Hanover
Settlement, Inc. Hanover the settlement agent Ally transactions.
Pitchersky admitted that repeatedly concealed from Ally his affiliation and
ownership Hanover. Pitchersky also admitted that, from December 2010
January 2011, instructed Hanover forward NMC least $5.3 million
received from Ally and instead used those funds for other purposes.
This case being investigated SIGTARP, the U.S. Attorney Office for the
Eastern District Pennsylvania, the FBI, and the Department Veterans Affairs
Office Inspector General.
Former 12-Year Federal Fugitive Sentenced Federal Prison Massive
Nationwide Foreclosure Scam Glen Alan Ward August 2013, Glen Alan Ward, former Los Angeles resident who fled Canada and was Federal fugitive for years, was sentenced years
Federal prison followed three years supervised release, and ordered pay
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
approximately $60,000 restitution for his prominent role nearly 15-year
foreclosure fraud scheme California. previously reported, Ward pled guilty bankruptcy fraud and aggravated
identity theft April 2013. Ward solicited and recruited homeowners whose
properties were danger imminent foreclosure, including foreclosures TARP
banks, promising delay the foreclosures for $700 fee. Ward actions victimized
more than 800 struggling homeowners, stole the identities unsuspecting victims
involved bankruptcy proceedings, and exploited bankruptcy laws defraud
lenders, which included numerous TARP banks, including Bank America and
U.S. Bank. order impede these foreclosure sales, Ward stole identities unsuspecting
debtors who recently filed bankruptcy. then directed his paying clients grant interest their distressed home one those debtors, and subsequently
directed the homeowner lender stop the impending foreclosure sale due the bankruptcy. The fraudulent scheme perpetrated Ward and his coconspirators delayed the foreclosure sales hundreds distressed properties using bankruptcies filed judicial districts. part the scheme, Ward
admitted collecting more than $1.2 million from his clients who paid for his illegal
foreclosure-delay service, all which agreed forfeit.
Ward also admitted that worked with Frederic Alan Gladle perpetrate the
foreclosure-rescue fraud. previously reported, Gladle was charged with and pled
guilty the fraud scheme. May 2012, Gladle was sentenced months Federal prison and ordered pay $214,259 restitution and forfeit $87,901.
This case was investigated SIGTARP, the U.S. Attorney Office for the
Central District California, the U.S. Attorney Office for the Northern District California, the FBI, and the U.S. Trustee Office.
Three Charged Foreclosure Rescue Scam KATN Trust September 11, 2013, superseding indictment was returned against Alan
David Tikal, his wife Tamara Teresa Tikal, and Ray Jan Kornfeld for their roles fraudulent mortgage rescue operation. Tamara Tikal and Kornfeld were arrested SIGTARP agents and its law enforcement partners September 12, 2013. alleged that Tamara Tikal and Kornfeld continued the scheme after Alan Tikal
initial arrest September 2012.
According the superseding indictment, from January 2010 through August
20, 2013, the defendants conspired deceive distressed homeowners throughout
California and other states. Alan David Tikal allegedly falsely told distressed
homeowners that was registered private banker who could reduce their
outstanding home loans 75% and that had tremendous success rate.
Through entity named KATN Trust (allegedly short for Kicking Ass, Taking
Names distressed homeowners were promised that, for significant upfront
fee, the homeowners existing home loan would replaced with new loan amount equal only 25% the original loan principal. Homeowners
allegedly were also instructed send all payments the new loan Tikal designated recipient and ignore any demands for payment the original
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
lenders. 2011, Alan Tikal filed bankruptcy and allegedly listed the properties
many his client victims his personal property, and the financial institutions
that extended those mortgage loans his creditors. The bankruptcy filing initiated automatic stay any pending foreclosure actions, and thus, enabled the
Tikals, Kornfeld, and his co-conspirators allege that the mortgage relief program
worked, attract new distressed homeowners and encourage the distressed
homeowners continue making payments KATN. Because the bankruptcy
filing, and spite Alan Tikal arrest September 2012, the indictment alleges
that many homeowners continued make loan payments KATN. The Tikals,
Kornfeld, and their co-conspirators allegedly never made any payments financial
institutions behalf homeowners satisfaction their pre-existing mortgages
and never extended loans any homeowners. This resulted many victims
losing their homes foreclosure. alleged that more than 1,000 victimized
homeowners paid excess $3.3 million KATN and these funds were
transferred accounts controlled the Tikals.
Alan Tikal scheduled trial February 2014. convicted, faces years prison. Trial dates have not yet been scheduled for Tamara Tikal Kornfeld.
This case being investigated SIGTARP, the U.S. Attorney Office for the
Eastern District California, the California Attorney General Office, IRS-CI,
the California Department Justice, and the Stanislaus County District Attorney
Office.
Four Sentenced Prison for Running HAMP Mortgage Modification Scam 
CFSA Home Solutions July 29, 2013, Justin Koelle, Jacob Cunningham, John Silva, and
Dominic Nolan were sentenced for their roles operating mortgage
modification scheme that defrauded hundreds victims. Koelle was sentenced
nine months prison, followed five years probation. Cunningham and Silva
were each sentenced eight months prison, followed five years probation,
and jointly paid $40,000 restitution. Nolan was sentenced six months
prison, followed five years probation. Additional restitution for all four
defendants will determined later court hearing. All defendants were also
prohibited from engaging loan modification loan consulting practices for the
duration their sentences.
Koelle, Cunningham, Silva, and Nolan pled guilty May 2013 charges that
stemmed from their roles the fraud scheme. Also, June 2012, co-defendant
Andrew Phalen was sentenced one year prison followed five years
probation for his role the fraud scheme. All five defendants were arrested
March 2012 and charged with multiple felony counts violating California state
law, including conspiracy charge illegal upfront fees for mortgage modifications,
conspiracy commit forgery, grand theft false pretenses, theft from elder,
and money laundering.
Between January 2009 and March 2012, the defendants enticed homeowners participate fraudulent loan modification program making numerous false
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
misrepresentations homeowners through advertisements, websites, promotional
letters, and direct conversations. The misrepresentations included: (i) Treasury
HAMP program would apply homeowners circumstances; (ii) the defendants
had 100% success rate obtaining mortgage modifications for homeowners; and
(iii) that homeowners would refunded their paid fees the defendants could not
modify homeowner loan. The defendants never submitted any loan applications banks behalf any the homeowners who paid this fee. evade detection law enforcement, the defendants changed the names, phone numbers, and
addresses the sham companies they operated, including CSFA Home Solutions,
Mortgage Solution Specialists, Inc., Associates, and National Mortgage
Relief Center.
The case was investigated SIGTARP, Orange County, California, District
Attorney Office, U.S. Secret Service, Huntington Beach Police Department,
California Department Real Estate, Orange County Probation Department,
Orange County Sheriff Department, Costa Mesa Police Department, Irvine
Police Department, and Santa Ana Police Department.
Perpetrators Nationwide Foreclosure Rescue Scam Sentenced Federal
Prison Home Advocate Trustees September 13, 2013, Mark Farhood and Jason Sant were sentenced
Federal prison for their roles operating nationwide online foreclosure rescue
scam that went various names, including Home Advocate Trustees HAT and
Walk Away Today, and used various websites, including walkawaytoday.org and
seefastusa.com, deceive hundreds vulnerable, distressed homeowners into
surrendering their properties the company. Farhood was sentenced years prison, followed three years supervised release. Sant was sentenced six
years prison, followed two years supervised release. Farhood and Sant were
both barred from working the real estate industry part their supervised
release. Farhood was ordered forfeit his interest real property located
Costa Rica well his interest several Peruvian businesses. The defendants
were ordered forfeit approximately million fraud proceeds well their
interests several bank accounts, silver coins and bars, and other assets.
Farhood and Sant each pled guilty May 2013 conspiracy commit
wire fraud, wire fraud, and bank fraud Federal court Alexandria, Virginia.
Farhood and Sant, co-owners and operators HAT, admitted that they and
their co-conspirators used their website walkawaytoday.org and other websites fraudulently represent hundreds distressed homeowners that they could
walk away from their homes and their mortgages without negative effect their
credit selling their homes HAT for nominal fee. Farhood and Sant further
admitted that, order obtain possession the distressed homes, they executed
quitclaim deeds favor HAT and sent the distressed homeowners fraudulent
closing documents. The homeowners then stopped paying their mortgages and
left their homes the mistaken belief that they had sold their homes HAT.
Once HAT took possession the homes, Farhood and Sant admitted leasing
the properties and collecting all rent and security deposit payments for their own
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
personal use. When lenders began foreclosure proceedings the distressed
properties, Farhood and Sant delayed the foreclosure process submitting the
lenders fraudulent HAMP applications. Through these misrepresentations, HAT
fraudulently obtained more than $2.8 million.
This case was investigated SIGTARP, the U.S. Attorney Office for the
Eastern District Virginia, and the FBI.
California Attorneys Sentenced Loan Modification Scam Flahive Law
Corporation September 12, 2013, Gregory Flahive was sentenced one year county
jail and three years probation connection with his conviction counts state grand theft charges. The convictions stem from his participation
fraudulent loan modification scheme perpetrated through the law firm shared
with his former wife, Cynthia Flahive, Flahive Law Corporation FLC Gregory
Flahive was also suspended from the practice law for three years the State Bar California connection with the conviction. July 10, 2013, Cynthia Flahive was sentenced three years probation
misdemeanor conspiracy conviction for her participation the fraud scheme. She
also was ordered perform 240 hours community service and pay restitution $8,965. part her plea agreement, Cynthia Flahive agreed not engage in,
offer, advertise any residential loan modification services. Also, Cynthia Flahive
served 60-day bar suspension while two-year bar probation. previously reported, May 16, 2012, Michael Kent Johnson, the former
managing attorney for FLC, entered plea contest misdemeanor
conspiracy for his participation the FLC fraud scheme. Johnson required serve three years probation and 200 hours community service, pay
restitution $10,560, and not participate loan modification services.
From January 2009 December 2010, FLC promoted its loan modification
services homeowners through advertisements, including television infomercial.
FLC falsely represented that experienced lawyers would negotiate with banks behalf homeowners seeking modifications, including under HAMP,
misrepresented that FLC law firm status would give them extra leverage when
negotiating with such banks, and overstated FLC rate success obtaining
loan modifications behalf homeowners. FLC allegedly collected up-front fees $2,500 from homeowners for loan modification services that were never
performed.
The case being investigated SIGTARP, the California Attorney General,
Folsom Police Department, Rancho Cordova Police Department, and Dorado
Sheriff Department.
California Man Pleads Guilty Foreclosure-Rescue Scam Walter Bruce Harrell August 2013, Walter Bruce Harrell pled guilty Federal court San
Francisco, California, bankruptcy fraud and making false statements
bankruptcy proceedings. sentencing November 13, 2013, Harrell faces
five years Federal prison, fine $250,000, and restitution.
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
Harrell admitted that from March 2011 through January 2013, perpetrated scheme prevent lenders, including TARP-recipient banks, from lawfully
foreclosing properties. Harrell admitted soliciting homeowners whose
properties were facing foreclosure and promising postpone the foreclosure
exchange for monthly fee. After the fees were paid, Harrell admitted that
directly indirectly had the property owners transfer fractional interest their
distressed property individuals paid Harrell voluntarily file for bankruptcy. required law, these bankruptcy filings automatically halted the foreclosure
sales until the lenders sought relief from the stay until the bankruptcy case was
dismissed. circumstances where the bankruptcy court allowed foreclosure
proceed, Harrell admitted that paid individual file bankruptcy petitions
which could execute the scheme defraud creditors who were attempting
lawfully foreclose numerous properties. doing so, delayed and obstructed
foreclosure sales creditors, including TARP banks, through improper use the
Federal bankruptcy process.
This case being investigated SIGTARP, the U.S. Attorney Office for the
Northern District California, and the FBI.
Executive Debt Collection Agency Sentenced for Bribing Bank Official 
Oxford Collection Agency September 2013, Patrick Pinto, former vice president Oxford Collection
Agency, Inc. Oxford was sentenced two years probation accompanied
six months home confinement, and $10,000 fine for his role scheme
defraud business clients well Webster Bank, TARP recipient bank. Pinto
previously pled guilty June 2013 Federal court Bridgeport, Connecticut,
conspiracy commit bank bribery. Patrick Pinto admitted that, from August 2008
through October 2010, and other Oxford executives engaged multi-year
scheme defraud its lender, TARP recipient Webster Bank, well its investors,
clients and commercial debtors from which Oxford collected. part the
scheme, Patrick Pinto and other Oxford executives made monthly cash payments
continue receiving debt collection business from TARP recipient U.S. Bank. previously reported, February 2013, Wilbur Tate III was arrested
SIGTARP agents and its law enforcement partners and charged with taking
bribes from Oxford executives while was assistant vice president TARPrecipient U.S. Bank. Tate case pending. January 2013, Richard Pinto, the
now-deceased former chairman Oxford, was sentenced months Federal
prison followed five years supervised release and was ordered pay $12.3
million restitution. Richard and his son, Peter Pinto, each pled guilty using
Oxford perpetrate the multi-million dollar fraud scheme. Peter Pinto served
Oxford chief executive officer. December 2012, three more former Oxford
senior executives were charged and pled guilty for their roles the scheme:
Randall Silver, chief financial officer; Charles Harris, executive vice president;
and Carlos Novelli, chief operations officer. sentencing, Peter Pinto faces
maximum years prison and fine $20 million; Silver faces
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
years prison and $500,000 fine; and Harris and Novelli each face five
years prison and $250,000 fine.
From January 2007 through March 2011, Oxford had agreements with
business clients collect debts from debtors, report such collections the
clients, and remit the collected payments back the clients. The clients would
pay Oxford portion the monies collected Oxford fee. assistant vice
president U.S. Bank, Tate was responsible for outsourcing debt collection
accounts collection agencies, including Oxford. Silver, Harris, and Novelli
admitted conspiring with Richard Pinto and Peter Pinto execute fraud
scheme which they (i) collected funds from debtors behalf clients but
did not remit those funds the clients and (ii) created false documents and used
other deceptive means cover their failure remit collected funds clients
and their improper use the funds. Richard Pinto and Peter Pinto also admitted causing Oxford secure line credit from TARP recipient Webster Bank
without disclosing the bank that Oxford was defrauding its clients and had
significant outstanding payroll taxes. Silver also helped Richard Pinto and Peter
Pinto defraud Webster Bank inducing the bank increase the line credit million withholding Oxford true financial condition and submitting falsified
financial records the bank. Richard Pinto, Peter Pinto, and Silver also admitted laundering funds from the line credit providing those funds clients maintain the clients business, which continued the scheme. The fraudulent
scheme led victims lose more than $12 million.
The case being investigated SIGTARP, the U.S. Attorney Office for
the District Connecticut, the U.S. Attorney Office for the Northern District Georgia, IRS-CI, the FBI, and the Connecticut Securities, Commodities and
Investor Fraud Task Force.
Sentences Resulting from TARP-Related Crimes the 112 defendants convicted result SIGTARP investigation,
defendants have already been sentenced prison for TARP-related crimes,
were sentenced probation, and the remainder await sentencing.
The consequences for TARP-related crime are severe. The average prison
sentence imposed courts for TARP-related crime investigated SIGTARP months, which nearly double the national average length prison sentences
involving white collar fraud months.iii Thirteen defendants investigated
SIGTARP were sentenced years more Federal prison, including Lee
Farkas, former chairman mortgage company Taylor, Bean and Whitaker, who serving 30-year prison sentence. Many the criminal schemes uncovered
SIGTARP had been ongoing for years, involve millions dollars, and complicated
conspiracies with multiple co-conspirators. average, result SIGTARP
investigations, criminals convicted crimes related TARP banking programs
have been sentenced serve months prison. Criminals convicted for
mortgage modification fraud schemes other mortgage fraud investigated
iii See the U.S. Sentencing Commission 2012 Sourcebook Federal Sentencing Statistics for additional information.
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
SIGTARP were sentenced serve average months prison. Criminals
investigated SIGTARP and convicted investment schemes such Ponzi
schemes and sales fake TARP-backed securities were sentenced serve
average 108 months prison. Figure 1.3 shows the people sentenced prison,
the sentences they received, and their affiliations.
FIGURE 1.3
Lee Bentley Farkas
360 months years supervised release
Chairman
Taylor, Bean Whitaker
Stephen Fields
204 months years supervised release
Executive Vice President
Bank the Commonwealth
David McMaster
188 months years supervised release
Vice President
American Mortgage
Specialists Inc.
Mark Anthony McBride
170 months years supervised release
Omni National Bank
Delroy Davy
168 months years supervised release
Omni National Bank
George Hranowskyj
168 months years supervised release
Owner/Operator
345 Granby, LLC
Mark Conner
144 months years supervised release
President
FirstCity Bank
Eric Menden
138 months years supervised release
Owner/Operator
345 Granby, LLC
Robert Egan
132 months years supervised release
President
Mount Vernon Money Center
Mark Farhood
132 months years supervised release
Owner
Home Advocate Trustees
Glen Alan Ward
132 months years supervised release
Partner
Timelender
John Farahi
120 months years supervised release
Investment Fund Manager
and Operator
New Point Financial
Services, Inc.
Gordon Grigg
120 months years supervised release
Financial Advisor and Owner
ProTrust Management, Inc.
Scott Powers months years supervised release
CEO
American Mortgage
Specialists Inc.
Robin Bruhjell Brass months years supervised release
Owner/Operator
BBR Group, LLC
Catherine Kissick months years supervised release
Senior Vice President
Colonial Bank
Troy Brandon Woodard months years supervised release
Vice President
Bank the Commonwealth
Subsidiary
Howard Shmuckler months years supervised release
Owner/Operator
The Shmuckler Group, LLC
Clayton Coe months years supervised release
Vice President
Senior Commercial Loan
Officer
FirstCity Bank
David Tamman months years supervised release
Attorney
Nixon Peabody LLP
Lori Macakanja months years supervised release
Housing Counselor
Home Front, Inc. HUD-approved company)
Jerry Williams months years supervised release
President, CEO, and Chairman
Orion Bank
Desiree Brown months years supervised release
Treasurer
Taylor, Bean Whitaker
Jason Sant months years supervised release
Co-owner
Home Advocate Trustees
Adam Teague months years supervised release
Vice President
Appalachian Community Bank
Francesco Mileto months years supervised release
Glenn Steven Rosofsky
[deceased] months years supervised release
Owner
Federal Housing Modification
Department
Frederic Gladle months years supervised release
Operator
Timelender
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
William Cody months years supervised release
Owner/Operator
CC Holdings, LLC
Delton Armas months years supervised release
CFO
Taylor, Bean Whitaker
Jeffrey Levine months years supervised release
Executive Vice President
Omni National Bank
Bernard McGarry months years supervised release
Chief Operatiing Officer
Mount Vernon Money Center
Richard Pinto [deceased] months years supervised release
Chairman
Oxford Collection Agency
Dwight Etheridge months years supervised release
President
Tivest Development
Construction, LLC
Julius Blackwelder months years supervised release
Manager
Friends Investment Group
Paul Allen months years supervised release
CEO
Taylor, Bean Whitaker
Brent Merriell months years supervised release
Robert Maloney, Jr. months years supervised release
In-house Counsel
FirstCity Bank
Cheri months years supervised release
Owner/President
Galleria USA
Roger Jones months years supervised release
Federal Housing Modification
Department
Raymond Bowman months years supervised release
President
Taylor, Bean Whitaker
Thomas Hebble months years supervised release
Executive Vice President
Orion Bank
Michael Trap months years supervised release
Owner
Federal Housing Modification
Department
Tommy Arney months years supervised release
Owner
Residential Development
Company
Clint Dukes months years supervised release
Owner
Dukes Auto Collision Repair
Angel Guerzon months years supervised release
Senior Vice President
Orion Bank
Reginald Harper months years supervised release
President and CEO
First Community Bank
Thomas months years supervised release
Owner/CFO
Galleria USA, Inc.
Karim Lawrence months years supervised release
Loan Officer
Omni National Bank
Ziad Nabil Mohammed Saffar months years supervised release
Operator
Compliance Audit
Solutions, Inc.
Troy Fouquet months years supervised release
Owner
Team Management, LLC
TRISA, LLC
Gregory Flahive months years probation
Owner/Attorney
Flahive Law Corporation
Lynn Nunes months years supervised release
Owner
Network Funding
Carlos Peralta months years supervised release
Park Avenue Bank
Andrew Phalen months years probation
Operator
CSFA Home Solutions
Sara Beth Bushore
Rosengrant months years supervised release
Operator
Compliance Audit
Solutions, Inc.
Justin Koelle months years probation
CEO
CSFA Home Solutions
Jacob Cunningham months years probation
CEO
CSFA Home Solutions
John Silva months years probation
Senior Official
CSFA Home Solutions
Daniel Saffar months years supervised release
Sales Representative
Compliance Audit
Solutions, Inc.
Dominic Nolan months years probation
Owner
CSFA Home Solutions
Teresa Kelly months years supervised release
Operations Supervisor
Colonial Bank
Sean Ragland months years supervised release
Senior Financial Analyst
Taylor, Bean Whitaker
Mark Shoemaker day
(with credit for time served) years supervised release
Michael Bradley Bowen day
(with credit for time served) years supervised release
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
Location TARP-Related Crimes
SIGTARP has found, investigated, and supported the prosecution TARP-related
crime throughout the nation. Our investigations have led criminal charges prosecutors against 154 defendants (112 whom have been convicted September 30, 2013, while others await trial).iv Many these defendants
committed their alleged crimes against victims multiple states. These defendants
were charged courts states and the District Columbia. SIGTARP
investigations have identified victims states and the District Columbia.
Figure 1.4 shows locations victims cases SIGTARP has investigated. Figure
1.5 shows locations U.S. Attorney Offices and state prosecutorial offices where
criminal charges were filed result SIGTARP investigations.v
FIGURE 1.4
SIGTARP INVESTIGATIONS HAVE IDENTIFIED VICTIMS STATES AND
WASHINGTON
States with victims:
AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA,
HI, IA, ID, IL, IN, KS, KY, LA, MA, MD,
ME, MI, MN, MO, MS, NC, NE, NH, NJ,
NM, NV, NY, OH, OR, PA, RI, SC, TN, TX,
UT, VA, WA, WI, WV, Criminal charges are not evidence guilt. defendant presumed innocent until and unless proven guilty. prosecutors partnered with SIGTARP ultimately decide the venue which bring criminal charges resulting from SIGTARP
investigations.
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
FIGURE 1.5
LOCATIONS WHERE CRIMINAL CHARGES WERE FILED RESULT
SIGTARP INVESTIGATIONS
Fargo
Buffalo
Brooklyn
New York
Chicago
Sacramento
San Francisco
Las Vegas
Concord
Boston
New Haven
Newark
Philadelphia
Wilmington
Upper Marlboro
District Columbia
Alexandria
Springfield
Kansas City
Norfolk
Jefferson City
Nashville
Los Angeles
Riverside
San Diego
Atlanta
Macon
Tallahassee
New Orleans
Tampa
Los Angeles, California
Central District California
Sacramento, California
Eastern District California
Sacramento, California
Superior Court California
San Francisco, California
Northern District California
San Diego, California
Southern District California
New Haven, Connecticut
District Connecticut
Wilmington, Delaware
District Delaware
Tampa, Florida
Middle District Florida
Tallahassee, Florida
Northern District Florida
Macon, Georgia
Middle District Georgia
Atlanta, Georgia
Northern District Georgia
Springfield, Illinois
Central District Illinois
Chicago, Illinois
Northern District Illinois
Chicago, Illinois
Circuit Court Cook County, Illinois
New Orleans, Louisiana
Eastern District Louisiana
Boston, Massachusetts
District Massachusetts
Upper Marlboro, Maryland
Prince George District Court
Kansas City, Missouri
Western District Missouri
Jefferson City, Missouri
Western District Missouri
Fargo, North Dakota
District North Dakota
Concord, New Hampshire
District New Hampshire
Newark, New Jersey
District New Jersey
Las Vegas, Nevada
District Nevada
Brooklyn, New York
Eastern District New York
Buffalo, New York
Western District New York
New York, New York
Southern District New York
Philadelphia, Pennsylvania
Eastern District Pennsylvania
Nashville, Tennessee
Middle District Tennessee
Alexandria, Virginia
Eastern District Virginia
Washington,
District Columbia
Restitution and Forfeiture from TARP-Related Crimes September 30, 2013, investigations conducted SIGTARP have resulted more than $4.68 billion court orders for the return money victims the Government. These orders happen only after conviction and sentencing civil resolution and many SIGTARP cases have not yet reached that stage;
therefore, any additional court orders would serve increase this amount. Orders restitution and forfeiture victims and the Government numerous assets well seized assets pending final order include more than vehicles, more
than properties (including businesses and waterfront homes), more than
bank accounts (including bank account located the Cayman Islands), bags
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
silver, U.S. currency, antique and collector coins (including gold, silver, and copper
coins), artwork, and antique furniture, Civil War memorabilia, NetSpend Visa and
CashPass MasterCard debit cards, Western Union money orders with the Pay 
line blank, and the entry money judgments courts against more than defendants. the more than vehicles ordered forfeited (including automobiles,
tractor, water craft, recreational and commercial vehicles) several are antique and
expensive cars, including 1969 Shelby Mustang, 1932 Ford Model 1954
Cadillac Eldorado convertible, 1963 Rolls Royce, and 1965 Shelby Cobra.
Some examples assets seized the Government SIGTARP investigations
are included Figure 1.6.
FIGURE 1.6
2005 Hummer H2. Estimated value 2013:
$24,000. (Source Kelley Blue Book)
2010 Mercedes-Benz GLK 350 4Matic.
Estimated value 2013: $29,000. (Source
Kelley Blue Book)
1958 Mercedes-Benz Cabriolet 220. Estimated
value 2013: $185,000. (Source Hagerty.com)
Property located Norfolk, Virginia. (Photo
courtesy Bill Tiernan, The Virginian-Pilot)
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
19th century English painting
 Royal Family, oil canvas.
Estimated appraised value:
$6,000.
Property located Chesapeake, Virginia. (Photo
courtesy Bill Tiernan, The Virginian-Pilot)
French-style gilt, bronze, and green malachite
columnar 16-light torch res with bronze
candelabra arms. Estimated appraised value:
$8,000.
2005 Scout Dorado. (Sold for $1,800)
Cash seized from safe, $158,000.
Alabama property ordered forfeited.
Kubota tractor.
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
TARP-Related Prohibitions from Working Banking and Financial
Services, Government Contractor, Licensed Attorney
SIGTARP investigations not only have led lengthy prison terms, restitution
and forfeiture orders and civil judgments for TARP-related offenses, but also
have resulted senior executives being suspended permanently banned from
working banking and financial services, Government contractor, licensed attorney. September 30, 2013, SIGTARP investigations have
resulted orders temporarily suspending permanently banning individuals
from working the banking financial industry, working contractor with
the Federal Government, working licensed attorney. Many these people
were the highest levels companies that applied for received TARP bailout.
They were trusted exercise good judgment and make sound decisions. However,
they abused that trust, many times for personal benefit. The suspensions and bans
remove these senior executives from the banking and financial industries which
many practiced for years. violation the removal, some instances, could basis for further prosecution. These high-level executives, some whom
were chief executive officers, chief financial officers, licensed attorneys, have
been sanctioned variety ways, many more than one authority: (i)
sentencing court part the terms supervised release after prison term has
been served; (ii) the executive branch the Federal government bar from
engaging Government contract; (iii) Federal banking regulator, which has
the authority ban individual from working the banking industry; (iv) the
Securities and Exchange Commission( SEC which has the authority issue
certain bans relating working the securities industry; (v) Federal court enforcing Federal Trade Commission FTC request order ban against
advertising, marketing, promoting, selling mortgage assistance mortgage relief;
and (vi) state bar association, which has the authority suspend disbar
licensed attorney. the individuals, were heads owners companies, including those
who were chairmen, chief executive officers, and presidents financial institutions. Most the remaining individuals were chief financial officers, senior vice
presidents, chief operating officers, chief credit officers, licensed attorneys, and
other senior executives. the $2.9 billion fraud that led the failures Taylor,
Bean and Whitaker Mortgage Corporation TBW and Colonial Bank, the chairman and chief executive officer TBW, Lee Bentley Farkas, not only was sent
Federal prison for years, but also was barred from contracting with the Federal
Government and prohibited the court from working the financial real
estate industries while supervised release subsequent his release from
Federal prison. TBW chief executive officer, Paul Allen, was temporarily barred
from working with the Federal Government, addition receiving 40-month
prison sentence.
The Federal Deposit Insurance Corporation FDIC issued lifetime bans
against former president, CEO, and chairman Mark Conner failed TARPapplicant FirstCity Bank, Stockton, Georgia, and former president and CEO
Reginald Harper failed TARP-applicant First Community Bank, Hammond,
QUARTERLY REPORT CONGRESS OCTOBER 29, 2013
Louisiana, for engaging unsafe and unsound banking practices and breaching
their fiduciary duty. The FDIC bans prohibit these former CEOs from participating the conduct the affairs not only the banks where they were senior
officials but also any bank the future. The bans were issued addition
them receiving 12-year prison term and two-year prison term, respectively. Jerry
Williams, former president, CEO, and chairman failed TARP-applicant Orion
Bank, Naples, Florida, barred from working the banking industry acting investment advisor while supervised release after his release from
his six-year prison term. New Point Financial CEO John Farahi, who engaged
Ponzi scheme that caused losses million investors, including TARP-funded
banks, was not only sentenced 10-year prison term but also has been barred
from working for being affiliated with any financial institution insured the
FDIC while supervised release and was separately banned the SEC from any
broker/dealer association. SIGTARP investigations the civil arena have also led
FTC actions against seven senior executives engaged two mortgage modification
fraud schemes. Senior executives Residential Relief Foundation and Freedom
Companies Lending have been permanently banned from advertising, marketing,
promoting, selling mortgage assistance products services.
SIGTARP investigations have also led professional bans suspensions six
chief financial officers, chief operating officers, and chief credit officers financial
institutions. part the terms his supervised release following his five-year
prison sentence, TBW chief financial officer, Delton Armas, prohibited from
engaging any aspect the banking business, mortgage real estate industry, finance for three years. Clayton Coe, FirstCity Bank chief financial officer, not
only was sentenced months Federal prison but also was banned for life
from banking the FDIC for engaging unsafe and unsound banking practices
and breaching his fiduciary duty. Adam Teague, former chief credit officer failed
TARP applicant Appalachian Community Bank, Ellijay, Georgia, was also banned
for life from banking the FDIC for engaging unsafe and unsound banking
practices and breaching his fiduciary duty, addition serving 70-month prison
sentence.
Nine attorneys have been investigated and brought justice SIGTARP
and its law enforcement partners. Robert Maloney, in-house counsel for First City
Bank, not only was sentenced 39-month prison term but also was ordered
the FDIC banned from working the banking industry and was disbarred the Georgia state bar. David Tamman, outside counsel for New Point Financial California, who was sentenced months Federal prison for his role
obstructing the Government investigation New Point, was ordered banned
from appearing before the SEC and also had his law license suspended the
California state bar association. Co-defendants Greg Flahive, Cynthia Flahive, and
Michael Kent Johnson the Flahive Law Corporation not only were convicted
conducting mortgage modification fraud scheme but also were suspended the
California bar association from practicing law. SIGTARP civil investigations have
also led three attorney suspensions the state California: Sean Rutledge the United Law Group, John Michael Harrison H.A.M.P. Resources, and
SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM
Warren Quann Second Chance Negotiations. Howard Shmuckler, convicted 2012 both



Sign Up for Updates!