A federal grand jury has indicted the former president of the First National Bank of Savannah and six other bank officers on charges that they defrauded their own as well as other banks out of millions of dollars, the U.S. Attorney for the Southern District of Georgia announced today.

Federal prosecutors in Savannah linked the alleged scheme to the 2010 collapse of the Savannah bank, which they said will cost the Federal Deposit Insurance Corp. insurance fund more than $90 million.

“The state of Georgia leads the nation in bank failures, with 84 banks failing since 2008, including First National Bank,” U.S. Attorney Edward Tarver said in announcing the indictments. “As the nation still recovers from a banking crisis of epic proportions, citizens should know this: no matter the complexity of the scheme, bank officers who place FDIC funds at risk through fraud and other criminal conduct will be brought to justice.”

The 35-count indictment names as defendants:

Heys Edward McMath III, 58, First National Bank’s president and chief executive officer. McMath is charged with conspiracy, bank fraud, misapplication of bank funds and making false statements to influence a bank.

Stephen Michael Little, 65, the bank’s executive vice president and chief financial officer. Little is charged with conspiracy and bank fraud.

Robert Wilson Dailey, 51, city president and chief lending officer. Dailey is charged with conspiracy, bank fraud, and making false entries in bank records.

Jay Patrick Gardner, 62, vice president and chief credit officer. Gardner is charged with conspiracy and bank fraud.

Isaac Jefferson Mulling, 53, senior vice president and commercial loan officer. Mulling is charged with conspiracy, bank fraud, making false statements to influence a bank, and making false entries in bank records.

Alan Robert Fleming, 36, city president of the Savannah bank’s Tybee Island branch and a commercial loan officer. Fleming is charged with conspiracy, bank fraud, misapplication of bank funds, making false statements to influence a bank, and making false entries in bank records.

Jeffrey Allen Farrell, 44, city president of the bank’s Richmond Hill branch and a commercial loan officer. Farrell is charged with conspiracy, bank fraud, making false statements to influence a bank, and making false entries in bank records.

The indictment alleges that as First National Bank’s financial condition deteriorated, the indicted bank officers schemed to hide from members of the bank’s Board of Directors and federal regulators millions of dollars in non-performing loans. They did so, according to the indictment, by illegally loaning money to unqualified borrowers in order to make payments on other loans; enticed others into assuming non-performing loans with what federal prosecutors say were “hidden promises, side deals” and other terms unfavorable to the bank; and recruited other banks to fund non-performing loans by making allegedly fraudulent misrepresentations about the loans’ quality and value, prosecutors said.

The defendants also allegedly falsified and fabricated bank documents and other records, federal prosecutors said.

Lawyers for the defendants could not be identified immediately.

Contributor: R. Robin McDonald in Criminal Cases | subscribe to rss |   share