The former president and vice president of a failed bank are facing a series of charges stemming from a scheme that led to GulfSouth Private Bank receiving $7.5 million from the Troubled Asset Relief Program before the bank failed.
According to the Special Inspector General for the Troubled Asset Relief Program, the president of GulfSouth Private Bank, Anthony Atkins, and a vice president of GulfSouth, Samuel Cobb, allegedly devised a scheme in 2008 to cover the fact that the bank had mortgage loans in default.
As part of the scheme, Atkins and Cobb allegedly solicited several of the bank’s customers, including Bruce Houle, Mark Shoemaker, Michael Bradley Bowen and William Blake Cody to take out loans in their names with the bank.
According to SIGTARP, to persuade Houle, Shoemaker, Bowen, and Cody to participate in the scheme, Atkins and Cobb told these individuals that the loans would be “non-recourse, meaning that, if the men defaulted, GulfSouth would have no recourse against them.”
After that, Atkins and Cobb allegedly created loans for approximately $3.8 million to the men, looping in the Department of Housing and Urban Development.
“As a part of the scheme, Atkins and Cobb caused U.S. Department of Housing and Urban Development Settlement Statement, Form HUD-1s to be prepared in connection with the loans issued by GulfSouth to Houle, Shoemaker, Bowen, and Cody,” SIGTARP said. “The HUD-1s falsely stated that the men provided cash for their respective transactions, but the amounts listed as ‘cash from borrower’ on the HUD-1s was actually money provided by GulfSouth.”
Additionally, Atkins, Cobb, Houle, Shoemaker, Bowen and Cody allegedly submitted fraudulent security agreements that falsely represented that the men were obligated to repay their respective loans, SIGTARP said.
As a result of the various pieces of the scheme, it appeared that the loans were performing.
Then, in September 2009, GulfSouth received $7.5 million from TARP.
After that, Atkins and Cobb allowed the condominiums that were collateral for the mortgage loans to be sold in short sales, resulting in a loss to GulfSouth, the indictment states.
Additionally, Atkins and Cobb allegedly allowed additional lines of credit they took out to be charged off of GulfSouth Private Bank’s books and records.
For their roles in the scheme, Atkins, Cobb, and Houle were named in a seven-count indictment charging them with conspiracy to commit bank fraud, false statements to a federally insured financial institution, bank fraud, and mail fraud affecting a financial institution.
The trial is scheduled for Feb. 6, 2017.