Bank executives indicted in Virginia bank failure

NORFOLK, Va., Thu Jul 12, 2012 – Former top executives of a failed U.S. bank here have been indicted by a federal grand jury on bank fraud and other charges for hiding loan losses in a scheme that allegedly led to the bank’s demise, officials said Thursday.
Edward J. Woodard, former CEO Bank of the Commonwealth, was among those charged. He led the bank for more than three decades before being forced to retire in December 2010, prosecutors said.
Prosecutors said six defendants have been taken into custody, including Woodard, 69. Woodard intends to plead not guilty, said his attorney, Andrew Sacks.
Another six people, including former employees and customers, have already pleaded guilty in the case.
The indictment is the latest fallout from the financial crisis that has damaged large and small banks. Bank of the Commonwealth, which once had $1.3 billion in assets, failed in 2011, costing the Federal Deposit Insurance Corp an estimated $268 million, prosecutors said.
“For more than 30 years, this community put their trust — and their money — in the Bank of the Commonwealth,” Neil MacBride, U.S. Attorney for the Eastern District of Virginia, said in a statement.
“These charges portray a bank leadership that betrayed that trust for their own profit at the detriment to their own bank, its shareholders, and the community it served.”
The indictment alleges many of the bank’s loans were made without regard to industry standards, and by 2008 its losses and foreclosed properties were ballooning. Insiders then hid the bank’s troubles out of fear its declining health would hurt investor and customer confidence, according to the indictment.

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