Tuesday, September 23, 2014

Allegations of FRAUD by OCC Deputy against FNB????

Straight from the Horses Mouth!

In an April 2014 story in the San Antonio Express News by Patrick Danner, OCC Deputy Comptroller Gil Barker stated that only three national banks in Texas had been shut down since the great depression.  

Those three banks, 
La Coste National Bank (2010), 
First National Bank Edinburg (September 2013) 
and most recently,  
Texas Community Bank of The Woodlands (February 2014) were the institutions Barker was referring to.

However, Barker went on to state that in 
"Two of those situations, there was fraud".

So let's take a look and see just for shits and giggles if one can figure out which bank wasn't closed with elements of fraud.

In 2011, the President of La Coste Bank went to federal prison after pleading guilty to making a false entry in the bank's books with the intent to defraud and deceive banking regulators.  OK, there's one of the two fraud cases Barker referred to from his April 2014 statement.  One down, one to go!

Now, let's look at Texas Community Bank.  The Office of Inspector General's Material Loss Review was released this summer and there was no mention of fraud as to why the bank failed and was shut down.

Uh Oh!  
I think the music stopped and there's no more chairs!

OK, let's flashback to February 2011 and look at the OCC Consent order issued to FNB.  It states below:



(1) The Board shall require and the Bank shall immediately take all necessary steps to correct each violation of law, rule, or regulation cited in the most recent Report of Examination (“ROE”), any subsequent ROE, or brought to the Board’s or Bank’s attention in writing by management, regulators, auditors, loan review, or other compliance efforts. 

So is one to assume that the good deputy of the OCC has confirmation of fraudulent violations of FNB and/or their officers/directors during their tenure??  

After all, it was only a cool $637,000,000 loss!

Just can't wait to get a copy of that ROE!!

Monday, September 22, 2014

Bank Executive Pleads Guilty to Fraud Charges; Are FNB Exec's in the FDIC's cross hairs?


Criminal Charges more common

A former TierOne Bank executive has pleaded guilty to defrauding the failed bank's shareholders and federal banking regulators.  It is the first criminal charge filed in connection with the bank's financial collapse.  

Don Langford, who was a senior vice president and chief credit officer at the Lincoln bank, pleaded guilty in U.S. District Court to conspiring to commit securities fraud, wire fraud and making false entries in a bank’s books and records, as well as one count of making false statements.

He faces as many as five years

 in prison on each count 

when he is sentenced Dec. 5. The criminal charge and pleading were filed in U.S. District Court of Nebraska on Tuesday. Langford also faced federal civil litigation in the case. 

“When the real estate market crashed, Don Langford, the chief credit officer and a senior vice president of TierOne Bank, worked with others to cook the bank’s books and cover up mounting losses,” Assistant U.S. Attorney General Leslie R. Caldwell said in a news release. 

“This conviction is another example of 

the Criminal Division’s pursuit of 

corporate executives who commit 

fraud, no matter what their title or 


According to the criminal information filed with his plea agreement,  Langford, 63, of Gibsonia, Pennsylvania, and others who were not named falsely inflated the value of TierOne’s loan and real estate portfolio in its required reports to the U.S. Securities and Exchange Commission and the Office of Thrift Supervision in 2009 and 2010.

In January 2009, TierOne had executed a supervisory agreement with the Office of Thrift Supervision that required TierOne to report information about its performance and financial condition and to maintain a minimum capital position in relation to its loan portfolio and other assets. Langford and others intentionally used outdated appraisals on properties, and rejected new appraisals that would have adversely affected TierOne’s reportable assets, revenue and earnings, the Justice Department said.

In addition, they delayed seeking new appraisals to conceal the current value of collateral and restructured loan terms to disguise the borrower’s inability to make timely interest and principal payments, according to the filing. As a result, Langford and others were able to hide millions of dollars in losses from regulators and investors.



Tuesday, July 15, 2014

Bank CFO waits in limbo over threat of criminal suit by FDIC!

Ex-bank CFO waits in limbo over 

threat of criminal suit

Cynthia Sabol, former chief financial officer at Bank of the Commonwealth, has been waiting 13 months for federal authorities to indict her. Or not.

"Ms. Sabol remains in jeopardy of broadly drawn criminal charges."

Bank of Commonwealth's CEO and EVP, "were convicted in federal court last year of orchestrating, with other defendants, a massive conspiracy to defraud the bank by hiding loan losses and committing other illegal banking practices." The executives "are serving lengthy prison terms."

"Sabol also was linked to the bank misconduct in the SEC's lawsuit." That suit accuses Sabol, the CEO and EVP "of securities fraud and claims their actions cost shareholders all their equity, in the hundreds of millions of dollars."


(pages 4 & 12 in OIG Report)


(page 13 in OIG Report)

Wednesday, July 2, 2014

Coincidence or SOP by FNB?

Two excerpts from two documents.....

 Examiners determined that the bank had masked its OREO problems by financing OREO sales on liberal terms, capitalizing property taxes, and advancing funds on borrowers’ other loans to cause the borrowers to remain current on OREO loans. The 2011 MRA expressed concerns over First National’s aggressive strategy to sell OREO without implementing proper accounting policies and practices, and directed the board to make accounting adjustments and file amended call reports.

27.   Grantor represents that this deed of trust and the Note are given for the following purposes:

A portion (approximately $100,000.00) of the debt evidenced by the Note is being or has been advanced by the Beneficiary to or on behalf of Grantor in part payment of the purchase price of the Property and/or for ad valorem taxes paid as part of the acquisition of the Property from prior owner(s);  the debt is secured both by this deed of trust and by a vendor's lien on the Property, which is expressly retained in a deed to Grantor of even date.  This deed of trust does not waive the vendor's lien, and the two liens and the rights created by this instrument shall be cumulative.  Beneficiary may elect to foreclose under either of the liens without waiving the other or may foreclose under both.  The deed is incorporated into this deed of trust.

Who is going to be accountable????

Surely the FBI has already taken note of this!!

Tuesday, May 13, 2014

Who knew about FNB's OREO "Funny Business"?

Here's the scene, it's April 14, 2011.
Picture yourself in a jam packed courtroom listening to testimony so a Judge can decide how long to sentence Mauro Padilla for.  U.S. Assistant District Attorney Jim Blankinship calls up former FNB attorney Eric Sherer to the stand. Sherer, also a defendant in the Tundra Village scandal AND a former (and fired) attorney for several plaintiffs in that lawsuit is asked many questions about FNB and the details surrounding the foreclosure of the Tundra Village development, and what an OIG report purports as masking a huge loss on the property.

Q. (Blankinship)  Okay. And by not writing it down to its true value, they get the benefit of maintaining that value, kicking the can down the road a little bit, until the day the regulators make them come to grips with the true value of that property; is that right?

A. (Sherer)  That's my understanding, yes, sir.

So it is clear, that under oath, Mr. Sherer was well aware, back in 2011 about the "masking" of this loss.  But let's not forget that Sherer was the foreclosing attorney on this property in 2009 when Jadon Construction of Edinburg "acquired" this project in October 2009 for $9.3M (despite a $2M appraisal)!  

Somehow, the OCC did NOT discover this one either until 2013???

Sunday, May 11, 2014

FBI Now Reviewing First National Bank Edinburg Shutdown Information

Office of Inspector General (OIG) 
Report Reveals findings of 
First National Bank Edinburg failure 

A news report by San Antonio Express News journalist Patrick Danner points out interesting facts and statements about the OIG report!!

  • FNB Officials arranged for loans to borrowers to buy stock in their holding company generating $26M in capital to honor withdrawals and operating losses, violating federal banking regulations.

  • This apparently violated federal banking regulations which prohibit making loans on bank stock.

  • FBI confirms it is reviewing information pertaining to FNB closure. 
(oh shit!)

  • FNB directors "gambled with depositors money, not their own"

  • FNB makes phony "Capital injections"
          (Just Kickin' the Can Down the Road)

  • OCC claims FNB Directors pressured at least one loan officer to change risk ratings on loans to hide actual risk 
(oh shit, again)!

  • Tundra Village Defendant David Rogers exerts "undue" influence is instrumental in FNB failure
  • Bankers and experts ask, "where were the regulators?"
  • Bankers are pissed!  "We have to replenish the DIF by higher assessments! They (OCC) didn't protect the fund."
  •  FNB Directors "Manufactured" Income

  • FNB loans to holding company are reminiscent of a criminal case involving president of Orion Bank in Florida who was sentenced to six years in federal prison 
(oh shit x 3!)

  • OIG concludes OCC "should have drilled down on the source of the injections" 
(how observant!)

  • OCC closed (audit) matter in 2009 "without sufficient evidence" FNB management had corrected problem.  FNB had "masked" problems in its foreclosed real estate portfolio by financing sales on "liberal terms" with 100% financing 
(Now everybody shout, "Jadon Construction and Tundra Village", and "Remember Eric Sherer's testimony at the 2011 Padilla sentencing?"

  • OCC didn't discover these liberal terms until 2013 
(now everybody shout, "Remember the 2011 Padilla sentencing when FNB president Jim Davis admitted selling Tundra Village for $9.3M but it only had an appraisal of $2.1M and even he would give you that much for it!"  
Yes, really, 2011!!  They (OCC) don't remember reading this blog???)

  • Is it "possible regulators held off closing FNB as long as possible to avoid a big hit to the DIF?"

(No shit Sherlock, it is possible!)

Yes, folks, it's just starting to get good! 

Wednesday, April 23, 2014

OCC tells Press: “Two of those situations, there was fraud, ”

According to Gilbert “Gil” Barker, the deputy comptroller in the Office of the Comptroller of the Currency’s Southern District in Dallas.

"Only three national banks have failed in Texas since the Great Recession"

 Texas Community Bank of The Woodlands 
closed in February

First National Bank of Edinburg, 
closed in September (2013) 

and La Coste National Bank
closed in 2010

“Two of those situations, there was fraud, ” Barker said. 

And which of these banks listed in red is currently being sued for fraud????