The estate of Layton Stuart, the late president and owner of One Financial Corporation, will pay the U.S. government $4 million to settle a lawsuit that accused Stuart of defrauding the federal government out of $17.3 million in funds from the Troubled Asset Relief Program.

Earlier this year, the government sued Stuart’s estate, accusing Stuart, who died in 2013, of making misrepresentations to induce the U.S. Department of the Treasury to invest $17.3 million in Arkansas-based One Financial as part of the Treasury’s Capital Purchase Program.

According to the complaint, Stuart, on behalf of One Financial, applied in late-2008 for a TARP investment of $17.3 million. The complaint alleged that Stuart knowingly made false statements about One Bank’s financial condition and what the bank intended to do with the TARP funds.

The complaint also marked the first time that a TARP bank had been charged under the False Claims Act for making material misrepresentations to Treasury in order to obtain taxpayer TARP bailout funds, according to the Office of the Special Inspector General for the Troubled Asset Relief Program.

After successfully convincing the government to hand over the $17.3 million bailout, Stuart allegedly diverted more than $2 million into his personal accounts for his own use, the complaint stated.

The complaint alleged that Stuart used the TARP funds to make payments on his personal credit cards, to fund more than $1.75 million in air travel for his friends and family, to fraudulently purchase a home for his daughter, to purchase a 2013 Land Rover for his son, to purchase a 2013 Lexus for his daughter, and other extravagant purchases.

Stuart was fired from his positions at the bank in September 2012 and died in March of 2013.

Stuart’s frauds were discovered through a federal investigation launched in 2013. 

The assets of Stuart’s estate and the trusts he had created were subject to a civil forfeiture action in the Eastern District of Arkansas. The civil forfeiture action was settled and dismissed contemporaneously with the False Claims Act settlement with the Stuart estate and trusts. 

Under these settlements, in addition to the $4 million recovered by the United States, $6.9 million will go to One Bank and $4 million will be returned to the Stuart trusts.

“Today’s settlement is an important milestone in the recovery of TARP funds that were obtained under false pretenses and used for improper purposes,” said Principal Deputy Assistant Attorney General Benjamin Mizer, head of the Justice Department’s Civil Division. “We will continue to be vigilant in assuring the proper use of taxpayer funds.”

The government’s False Claims Act lawsuit against One Financial remains pending. Separate criminal actions against several former One Financial and former One Bank executives also remain pending in the Eastern District of Arkansas, the DOJ said in a release.

“TARP’s Capital Purchase Program was designed to provide emergency assistance to banks and other financial institutions to facilitate lending to the American public, not for personal use of the bank holding company’s CEO,” said SIGTARP’s Christy Goldsmith Romero.

“This settles the government’s claim that as CEO of One Financial Corporation, Layton Stuart applied for TARP using false records or statements causing Treasury to provide TARP funds intended for the benefit of the bank, and then immediately diverted millions for his own personal use,” Romero said. “This is an important False Claims Act case to bring and recover TARP funds on behalf of taxpayers. SIGTARP will aggressively root out and investigate all fraud related to TARP.”