Bank supervision is at the core of the FDIC’s efforts to
ensure stability and public confidence in the nation’s financial
system. The FDIC is the primary federal regulator for 5,241
FDIC-insured, state-chartered institutions that are not members
of the Federal Reserve System (generally referred to as “state
non-member” institutions). The Department of the Treasury
(the Office of the Comptroller of the Currency and the Office
of Thrift Supervision) or the Federal Reserve Board supervise
other banks or thrifts, depending on the institution’s charter.
Key to effective supervision is a strong examination program.
The FDIC performs safety and soundness, information technology
(IT), trust, and other types of specialty examinations of
FDIC-supervised insured depository institutions. The majority
of the states participate with the FDIC in an examination
program under which certain examinations are performed on
an alternating basis by the state regulators and the FDIC.
The Corporation also has back-up examination authority for
national banks, state-chartered banks that are members of
the Federal Reserve System, and savings associations, all
in the interest of protecting the deposit insurance fund.
The examinations are conducted to assess an institution’s
overall financial condition, management practices and policies,
and compliance with applicable laws and regulations.
The banking industry has been marked by consolidation, the
impact of globalization, and the development of increasingly
complex investment strategies available to banks. This has
led bank regulators, both domestically and internationally,
to devise new standards for bank capital requirements commonly
referred to as Basel IA and Basel II. The FDIC has been engaged
with other bank regulators in developing new standards and
assessing the potential impact on bank safety and soundness.
In addition, the FDIC is faced with developing and implementing
programs to minimize the extent to which the institutions
it supervises are involved in or victims of financial crimes
and other abuse. Bank governance practices are important
safeguards against fraud and other abuses, and the FDIC has
issued guidance to banks about governance expectations, including
adherence to requirements in the Sarbanes-Oxley Act for publicly
traded financial institutions. In its role as supervisor,
the FDIC also analyzes data security threats, occurrences
of bank security breaches, and incidents of electronic crime
that involve financial institutions. As part of safety and
soundness examinations, the FDIC also ensures that the institutions
comply with regulatory reporting requirements of the Bank
As more and more laws are passed, and new regulations are
adopted to implement those laws, policy makers and regulators
have worked to ensure that the intended benefits justify
the considerable costs. Pursuant to the Economic Growth and
Regulatory Reduction Act of 1996, the FDIC and other bank
regulators have been reviewing regulations in order to identify
outdated or otherwise unnecessary regulatory requirements
imposed on insured depository institutions. Of note as we
were going to press with this semiannual report, the President
had signed S.2856, the Financial Services Regulatory Relief
Act. Among other provisions, this act includes an increase
from $250 million to $500 million on the asset size for eligibility
for an 18-month examination cycle; permission for banks,
thrifts, and credit unions to use new lending and investment
authority; and other changes allowing financial institutions
to improve the efficiency of their operations.
The OIG’s role under this strategic goal is conducting audits
and evaluations that review the effectiveness of various
FDIC programs aimed at providing continued stability to the
nation’s banks. The OIG also conducts investigations of fraud
at FDIC-supervised institutions; fraud by bank officers,
directors, or other insiders; obstruction of bank examinations;
fraud leading to the failure of an institution; fraud impacting
multiple institutions; and fraud involving monetary losses
that could significantly impact the institution.
To assist the FDIC to ensure the nation’s banks operate
safely and soundly, the OIG’s 2006 performance goals were
the effectiveness of the FDIC’s supervision program,
and assist FDIC efforts to detect and prevent bank secrecy
violations, fraud, and financial crimes in FDIC-insured
OIG Work in Support of Goal 1
The OIG’s Office of Investigations is a driving force in
combating fraud that occurs at or impacts financial institutions.
The perpetrators of such crimes can be those very individuals
entrusted with governance responsibilities at the institutions–directors
and bank officers. In other cases, individuals providing
professional services to the banks, others working inside
the bank, and customers themselves are principals in fraudulent
schemes. The intentional denial of accurate information to
bank examiners undermines the integrity of the examination
process. The OIG defends the vitality of the examination
process by investigating allegations of criminal obstruction
of bank examinations, often associated with fraudulent activities,
and by working with U.S. Attorneys’ Offices to bring these
cases to justice.
The following cases from the reporting period are illustrative
of the OIG’s success in pursuing Strategic Goal 1 during
the reporting period.
Sentencing of Former Hamilton Bank Officers for $20 Million
On July 26, 2006, the former chairman of the board and chief
executive officer, Hamilton Bank (Hamilton), and Hamilton
Bancorp, Hamilton’s bank holding company, Miami, Florida,
was sentenced in the U.S. District Court for the Southern
District of Florida to 30 years’ incarceration and 36 months
of supervised release. The defendant was immediately remanded
to the custody of the Attorney General.
After a month-long trial, the former chairman of the board
was convicted on all 16 charges of making false filings to
the Securities and Exchange Commission (SEC) and to bank
examiners, making false statements, wire fraud, bank fraud,
securities fraud, obstruction of a bank examination, and
On July 27, 2006, sentencing hearings were held for the
former Hamilton president, and the former Hamilton chief
financial officer, both of whom pleaded guilty before trial
and cooperated with the government during the investigation.
The former president was sentenced to 28 months’ incarceration,
24 months of supervised release, and was fined $10,000. He
previously pleaded guilty to two counts of securities fraud.
The former chief financial officer was sentenced to 28 months’ incarceration
to be followed by 24 months of supervised release as a result
of his earlier guilty plea to one count of securities fraud
and one count of obstruction of a formal agency proceeding.
Both men were ordered to surrender to the United States Marshal’s
Service on October 27, 2006.
The defendants participated in a fraudulent scheme whereby
they falsely inflated the results of operations, earnings,
and financial condition of Hamilton Bancorp in the Securities
and Exchange Commission filings; obstructed the Office of
the Comptroller of the Currency’s (OCC) examination of Hamilton
Bank; and lied to the investing public, the bank and securities
regulators, and their accountants regarding the true financial
health of Hamilton Bancorp and Hamilton Bank. In 1998 and
1999, the three defendants engaged in swap transactions (or “adjusted
price trades”) to hide Hamilton Bank’s losses on certain
loans, including more than $22 million in losses in 1998,
and falsely accounted for the transactions to make it appear
that no losses had been incurred. While the defendants falsely
reported the nature of the swap transactions to the investing
public and the regulators, the indictment cited recorded
conversations in which the defendants openly discussed the
transactions as swaps. During 1998, Hamilton Bancorp had
a market capitalization of more than $300 million.
Hamilton Bank was South Florida’s highest profile trade
finance bank before it ran into trouble with its regulator,
the OCC, over the questionable loan swaps that allowed the
bank to hide $22 million in losses in 1998. The OCC closed
the bank in January 2002 and the FDIC took on liquidation
responsibilities as receiver.
conducted by the FDIC OIG; prosecuted by the
U.S. Attorney’s Office for the Southern District of Florida.
Former President of the First National Bank of Blanchardville
Sentenced to 9 Years’ Incarceration and Ordered to Pay $13
Million in Restitution to the FDIC
On July 21, 2006, the former president of the First National
Bank of Blanchardville (FNBB), Blanchardville, Wisconsin,
was sentenced in U.S. District Court for the Western District
of Wisconsin. The defendant was sentenced to 108 months’ incarceration,
to be followed by 5 years of supervised release. In addition,
the defendant was ordered to pay $13.4 million in restitution
to the FDIC. The defendant earlier pleaded guilty to one
count of bank fraud. On May 9, 2003, FNBB was declared insolvent
by the OCC and the FDIC was appointed receiver for the failed
As part of his earlier plea statement to the court, the
defendant admitted that he devised a scheme to defraud FNBB
of his honest services that caused the bank to fail. Specifically,
the scheme to defraud involved:
false information to the board of directors;
exceeding the bank’s lending limits;
false reports with regulators and causing bank records
to be altered to mislead federal auditors;
$17 million worth of worthless checks that were deposited
into a customer’s account to reduce the overdraft status
on the account and reduce delinquent loan accounts;
minutes of the board of directors meetings;
false loan notes in loan files; and
to follow banking regulations regarding the classifications
| Joint investigation by the FDIC OIG, the Federal Bureau of Investigation (FBI), and the Internal Revenue Service Criminal Investigation Division, based on a referral from the Division of Resolutions and Receiverships; prosecuted by the U.S. Attorney’s Office for
the Western District of Wisconsin.
Former President of Canton State Bank and His Wife Indicted on 26 Counts of Bank Fraud
On June 8, 2006, in the Eastern District of Missouri, the former president of Canton State
Bank and his wife were indicted by a federal grand jury on 26 felony counts of conspiracy to
make false statements to FDIC-insured institutions and the U.S. Department of Agriculture
Farm Service Agency (FSA), false statements, money laundering, and bank fraud.
The indictment charged that between October 2001 and August 2004, the defendants understated
their liabilities on loan applications with Canton State Bank, The Paris National Bank,
Perry State Bank, Bank of Monticello, and the FSA. In addition, the defendants represented
to Perry State Bank and the FSA that the livestock and farm equipment that they pledged as
collateral security for loans was free and clear of all other liens and encumbrances, when they
had previously pledged the same collateral for other loans.
The indictment also charged that between August 2002 and May 2003, the former president
allegedly made numerous loans to a bank customer, who then wrote checks to return a substantial
portion of the loan proceeds to the former president. The indictment further alleged
that, in some cases, the payee on those checks was listed as the bank president’s wife’s minor
child in order to conceal the payments to him.
| Joint investigation by the FDIC OIG, the FBI, and the U.S. Department of Agriculture OIG, based on a referral from the Division of Supervision and Consumer Protection (DSC); prosecuted by the U.S. Attorney’s Office for the Eastern District of Missouri.
Former COO of Universal Federal Savings Bank Sentenced
On September 19, 2006, in the U.S. District Court for the
Northern District of Illinois, Universal Federal Savings
Bank’s (Universal) former chief operations officer (COO)
was sentenced to 38 months of incarceration, to be followed
by 3 years of supervised release and 600 hours of community
service. She was also ordered to pay restitution in the amount
of $1,313,082 to the FDIC. A Universal customer earlier pleaded
guilty to one count of wire fraud affecting a financial institution
and the former COO’s brother was sentenced to 2 years of
supervised release and 200 hours of community service. All
of Universal’s losses occurred prior to his activity; consequently,
no restitution was ordered. The former COO’s sentence, the
bank customer’s guilty plea, and the COO’s brother’s sentence
were the result of an indictment filed in January 2005 concerning
the activities surrounding the failure of Universal on June
As previously reported, the indictment alleged that a Universal
customer conspired with Universal’s COO to misapply the financial
institution’s funds and to make a false entry in a book,
report, or statement of or to Universal.
The bank customer wrote insufficient funds checks and deposited
those checks in Universal’s correspondent account at American
National Bank (ANB). After receiving immediate credit and
availability of those funds, he withdrew some or all of the
funds, and then covered the previous insufficient funds checks
plus the withdrawn funds by depositing even larger amounts
of insufficient funds checks. This cycle continued almost
daily for more than 6 months. During the conspiracy, the
bank customer made approximately 138 deposits at ANB that
included insufficient funds checks totaling more than $200
Universal’s chairman of the board of directors requested
a review of the bank customer’s account activity and directed
the former COO to provide copies of the fronts and backs
of checks. In order to conceal the check-kiting scheme, the
former COO and the bank customer agreed that the bank customer
would alter the checks. The bank customer and the former
COO’s brother, a certified public accountant and authorized
signer on the account with the customer, falsified the backs
of the account checks to conceal that they were deposited
into Universal’s correspondent account at ANB. On or about
June 20, 2002, the former COO knowingly provided the falsified
check copies to the chairman in furtherance of the conspiracy.
About 1 week later, the check-kiting scheme was discovered
and stopped. The scheme and conspiracy caused a loss in excess
of $10 million, and Universal was forced to cease operations.
investigation by the FDIC OIG and the FBI; prosecuted
U.S. Attorney’s Office, Northern District of Illinois.
Former Bank Director of Central Bank Convicted
of Misapplication of Bank Funds
On May 8, 2006, the former executive vice president and
chief lending officer of Central Bank, Houston, Texas, pleaded
guilty in the U.S. District Court for the Southern District
of Texas, to 11 counts of misapplication of bank funds by
a bank officer. The defendant’s guilty plea is the result
of an information filed on April 14, 2006.
The defendant admitted that between May 2001 and September
2003, while employed as an officer and director of Central
Bank, an FDIC-insured institution, he misapplied and converted
to his own use proceeds of loans from Central Bank to various
borrowers. The evidence proved, and the defendant conceded,
that he had created an assumed business name for himself,
CBMB & Associates. He placed false invoices for “fees” in
Central Bank’s loan files, authorized the disbursement of
loan proceeds to CBMB & Associates, and negotiated and deposited
into bank accounts on which he was the sole signatory the
checks representing these “fees,” thereby misapplying and
converting the bank’s funds to his personal benefit. Each
of the 11 counts of the criminal information accused the
defendant of embezzling loan proceeds in sums ranging from
as little as $3,390 to as much as $72,000.
As part of the defendant’s plea agreement, he entered into
and executed stipulation to an action under 8(e) of the Federal
Deposit Insurance Act, which provides for a lifetime ban
investigation by the FDIC OIG and the FBI, based on a
referral from the FDIC Legal
Division; prosecuted by the U.S. Attorney’s Office for
the Southern District of Texas.
Bank Vice President Sentenced to 41 Months’ Incarceration
On July 18, 2006, the former vice president of First Century
Bank was sentenced in the Eastern District of Tennessee to
41 months’ incarceration, followed by 60 months of supervised
release. She was also ordered to pay $600,000 in restitution
to First Century Bank. The defendant earlier pleaded guilty
to a one-count information charging her with bank fraud.
The defendant originated over 100 fraudulent loans during
her tenure with First Century Bank, resulting in bank losses
in excess of $600,000. She began falsifying loan records
to enable customers to obtain loans. As these loans became
delinquent, the defendant made unauthorized withdrawals from
inactive customer accounts and originated new loans in the
name of customers without their knowledge. The proceeds of
these unauthorized withdrawals and fraudulent loans were
then used to cover loan payments and to pay off existing
investigation by the FDIC OIG and FBI, based on a referral
from DSC; prosecuted by
the U.S. Attorney’s Office for the Eastern District of
Bank Customer Pleads Guilty to $18 Million Bank Fraud
On July 12, 2006, in the U.S. District Court for the Northern
District of Illinois, a bank customer pleaded guilty to a
criminal information charging him with one count of bank
fraud. The defendant admitted to devising a scheme to divert
$18 million of loan proceeds from creditors.
According to the information, the defendant defrauded two
financial institutions of loan payments owed by third-party
borrowers. The defendant submitted falsified loan payment
documents and financial reports to Lincoln State Bank, an
FDIC-supervised institution, and Ottawa Savings Bank, an
Office of Thrift Supervision-supervised institution. Both
financial institutions were FDIC insured.
These diverted funds represented proceeds and payments against
participation loan agreements between third-party borrowers
and 15 financial institutions. Commercial Loan Corporation,
Inc., Oak Brook, Illinois, a company controlled by the defendant,
brokered commercial loans between the affected borrowers
and lenders. As part of this service, Commercial Loan Corporation,
Inc., provided collection and payment services for the borrowers.
The defendant’s scheme involved collecting and diverting
loan payments owed to creditors, and overselling the loan
participation agreements to other financial institutions
to obtain funds in excess of the borrowers’ approved loans.
These loan payments and excess funds were then diverted,
for the defendant’s personal benefit, into a manufacturing
plant as capitalization loans. The defendant’s diverted funds
were lost when the plant closed and these “loans” went into
investigation by the FDIC OIG and the FBI, based on a
referral from DSC; prosecuted
by the U.S. Attorney’s Office for the Northern District
of Illinois, Eastern Division.
Real Estate Frauds
The increased reliance by both financial institution and
non-financial institution lenders on third-party brokers
has created opportunities for fraud. Some of the emerging
mortgage fraud schemes include “property flipping.” Property
flipping is best described as purchasing properties and artificially
inflating their value through false appraisals. The artificially
valued properties are then repurchased several times for
a higher price by associates of the “flipper.”
THREE MEN PLEAD GUILTY IN $8 MILLION REAL ESTATE “LAND
During April 2006, three businessmen pleaded guilty in the
U.S. District Court for the Central District of Illinois
to all charges in an August 5, 2005, 11-count superseding
indictment that charged them with bank fraud, mail fraud,
money laundering, and wire fraud.
The defendants admitted to engaging in a real estate “land
flipping” scheme from 1999-2005 to defraud real estate lenders,
including Central Illinois Bank, Champaign, Illinois, an
FDIC-insured institution, buyers, and sellers. The scheme
involved more than 150 fraudulent real estate sales and financing
transactions totaling more than $8 million in fraud against
The superseding indictment alleged that the defendants used
fraudulent appraisals to buy, sell, and finance properties
at prices fraudulently inflated. Two of the defendants represented
themselves as property managers who were in the business
of buying, selling, and managing real estate, though neither
were licensed real estate brokers or salespersons. The third
defendant was a licensed real estate appraiser who allegedly
performed numerous appraisals for the two defendants in which
he falsely inflated the value of the real estate.
To carry out the scheme, two of the defendants recruited
buyers, typically of modest means with little or no experience
in rental real estate investment. To entice the buyers, the
two defendants allegedly made one or more false representations
to them regarding prospective properties.
The two businessmen allegedly made more than $3 million
for their personal use and to promote the scheme, while the
real estate appraiser received fees of $350 to $450 per appraisal.
investigation by the FDIC OIG, the U.S. Postal Inspection
Service and the FBI; prosecuted
by the U.S. Attorney’s Office for the Central District
MORTGAGE BROKER PLEADS GUILTY TO A MORTGAGE FRAUD SCHEME
On September 25, 2006, a mortgage broker from Dallas, Texas,
pleaded guilty in the U.S. District Court for the Northern
District of Texas to an indictment charging him with one
count of wire fraud and aiding and abetting. The defendant
is scheduled to be sentenced on January 2, 2007.
As previously reported, the defendant and two other business
associates were charged in a 14-count indictment in March
2006. The grand jury charged one of the defendants with one
count of bank fraud, seven counts of wire fraud, and six
counts of engaging in monetary transactions derived from
specified unlawful activity. A second defendant was charged
with one count of bank fraud and six counts of wire fraud.
The third was charged with one count of wire fraud. Each
of the counts in the indictment also included the associated
charge of aiding and abetting. Following the indictment,
arrest warrants were issued, and agents from the FDIC OIG
and the FBI arrested two of the defendants on March 9, 2006.
The third defendant self-surrendered on March 10, 2006.
The indictment alleged that the three associates devised
a scheme to fraudulently obtain 21 mortgage loans totaling
$3,220,550. The defendants used schemes commonly referred
to in the mortgage industry as property flips, markups and
kickbacks, and HUD swaps to facilitate the mortgage fraud.
One of the mortgage companies impacted by this fraud scheme
was Fremont Investment & Loan, an FDIC-supervised institution
in Brea, California.
In each instance, one of the defendants convinced inexperienced
real estate investors to stand in as straw borrowers and
purchase the properties for fraudulently inflated sales prices.
A second defendant, a loan officer, and the third, a mortgage
broker, knowingly submitted false documentation to the lenders
to enable the straw borrowers to qualify for the mortgage
loans. Each of the straw borrowers received a financial inducement
for participating in the fraud scheme. Fraudulent real estate
appraisals were also submitted to the lenders to support
the inflated sales prices of the properties.
investigation by the FDIC OIG and the FBI; prosecuted
U.S. Attorney’s Office for the Northern District of Texas.
Other Successful Investigative Outcomes
FORMER STATE BANK OF COKATO EXECUTIVES PLEAD GUILTY
In August 2006, two former bank executives from the State
Bank of Cokato pleaded guilty in the U.S. District Court
for the District of Minnesota in connection with various
loan fraud schemes. The former president and director pleaded
guilty to a criminal information charging him with one count
of bank fraud and one count of making false entries in a
Quarterly Bank Report to the FDIC. The bank’s former executive
vice president pleaded guilty to one count of lying to a
federal agent in connection with a Small Business Administration
loan for a bank customer.
If convicted, the former president and director of the bank
faces a maximum potential penalty of 30 years in federal
prison and a $1 million fine on each of those two charges.
The former executive vice president faces a maximum potential
penalty of 5 years in prison and a $250,000 fine.
investigation by the FDIC OIG, the FBI, IRS - Criminal
Investigation Division, based
on a referral from the Kansas City FDIC Legal Division
and DSC Regional Office; prosecuted
by the U.S. Attorney’s Office for the District of Minnesota.
FORMER BANK OFFICER SENTENCED FOR BANK FRAUD
On April 27, 2006, the former assistant vice president of
Falcon International Bank, Laredo, Texas, was sentenced in
the U.S. District Court for the Southern District of Texas,
to 14 months of incarceration, to be followed by 60 months
of supervised release. She was also ordered to pay $106,768
in restitution; $50,000 of the restitution order is to be
paid to the bonding company with the remaining balance to
be paid to the bank.
The defendant’s sentence resulted from her earlier guilty
plea to a one-count information charging her with embezzlement
by a bank officer. The defendant’s scheme resulted in approximately
$106,768 in losses to the bank.
investigation by the FDIC OIG and FBI, with assistance
from the FDIC Legal Division;
prosecuted by the U.S. Attorney’s Office for the Southern
District of Texas.
FORMER EXECUTIVE VICE PRESIDENT OF IOWA-NEBRASKA STATE
On August 1, 2006, the former executive vice president of
Iowa-Nebraska State Bank, an FDIC-supervised bank, South
Sioux City, Nebraska, was sentenced in the U.S. District
Court for the Northern District of Iowa, to 5 months of incarceration,
to be followed by 5 months of house arrest, and fined $2,500.
In March 2006, the defendant was found guilty of making false
entries in the bank’s records.
investigation by the FDIC OIG and the FBI; prosecuted
U.S. Attorney’s Office for the Northern District of Iowa.
FORMER VICE PRESIDENT OF ALLIANCE BANK PLEADS GUILTY TO
On August 23, 2006, in the U.S. District Court for the District
of Minnesota, the former vice president in Commercial Lending,
Alliance Bank, New Ulm, Minnesota, pleaded guilty to one
count of theft, embezzlement, and misapplication by a bank
During a routine examination of Alliance Bank in August
2005, bank examiners discovered irregularities involving
dozens of cashier’s checks. They found evidence that the
former vice president and other officers of Alliance Bank
converted fees earned by the bank into cashier’s checks,
diverted those funds to their individual bank accounts, and
made false entries in the books and records of the bank.
In accordance with her plea agreement, the former vice president
agreed to assist the DOJ in its investigation of the other
senior Alliance Bank officers, paid $37,900 in restitution
to the bank, and stipulated to an action under 8(e) of the
Federal Deposit Insurance Act, which provides for a lifetime
ban from banking.
investigation by the FDIC OIG and the FBI,
based upon a referral from the DSC Kansas City Regional
prosecuted by the U.S. Attorney’s Office for the District
FORMER BRANCH MANAGER OF HUDSON SAVINGS BANK CHARGED WITH
On June 8, 2006, in the U.S. District Court for the District
of Massachusetts, the former branch manager of Hudson Savings
Bank, Hudson, Massachusetts, was charged in an information
with two counts of misapplication and embezzlement of funds
from Hudson Savings Bank.
According to the information, over a 5-year period, the
defendant allegedly tampered with more than 60 customers’ accounts
at the bank, performing or authorizing hundreds of credits
and debits, and causing a loss to the bank of more than $650,000.
The information alleged that the defendant withdrew funds
from existing customers’ deposit accounts and from active
or inactive home equity lines of credit. He also created
false accounts from which he withdrew funds. The defendant
allegedly avoided detection of his actions by repaying credit
lines from other customers’ accounts, taking steps to prevent
customers from receiving account statements for periods of
time, creating false loan statements that were sent to customers,
and changing the mailing addresses on loan accounts to addresses
controlled by the defendant. According to the information,
when customers became aware of unauthorized activity in their
accounts, the defendant corrected the account by depositing
funds from other customers’ accounts, sent a letter to the
customer reporting that there had been an “error” in the
account, and made a notation in the bank’s internal data
system that the account had been fixed and the customer notified.
investigation by the FDIC OIG, the FBI, and the Hudson
based on a referral from DSC; prosecuted by the Economic
Crimes Unit for the
U.S. Attorney’s Office for the District of Massachusetts.
BANK CUSTOMER SENTENCED FOR CONSPIRACY TO COMMIT BANK FRAUD
On April 24, 2006, a bank customer of the Bank of the Panhandle,
Guymon, Oklahoma, and Production Credit Association of Woodward,
Oklahoma, now Farm Credit Western, was sentenced in the U.S.
District Court for the Western District of Oklahoma, to 60
months of incarceration, 104 hours of community service,
and ordered to pay $2,608,137 in restitution ($2,361,245
payable to Production Credit Association and $246,891 to
the Bank of the Panhandle). The defendant’s sentence was
the result of his earlier guilty plea to an information charging
him with one count of conspiracy to commit bank fraud.
investigation by the FDIC OIG, U.S. Department of Agriculture
OIG, and the FBI;
prosecuted by the U.S. Attorney’s Office for the Western
District of Oklahoma.
Ongoing Audit Work
An ongoing audit in the supervision area is determining
whether the FDIC has established and implemented adequate
procedures for addressing IT security risks at FDIC-supervised
financial institutions that offer electronic banking products
Another assignment is determining whether examiners assess
the reliability of appraisals and sufficiency of insurance
coverage as part of the evaluation of an institution’s lending
practices and policies.