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."

"HIDING LOAN LOSSES"????

WHERE HAVE WE HEARD THAT BEFORE????

(pages 4 & 12 in OIG Report)

 "OTHER ILLEGAL BANKING PRACTICES"????

IS THAT THE SAME AS "UNSAFE AND UNSOUND" BANKING PRACTICES??

(page 13 in OIG Report)

Coincidence or SOP by FNB?

Two excerpts from two documents.....

#1

 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.

#2

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!!

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???

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! 

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????