A Bank of the Commonwealth in Norfolk, Virginia. (Image by Flickr user shoebappa
NORFOLK, Va., July 12 (UPI) -- The former chief executive and other top officials at the Bank of the Commonwealth were indicted for alleged bank fraud, federal prosecutors in Virginia said.
The bank executives are accused of masking non-performing assets at the Bank of the Commonwealth for their own personal benefit and to the detriment of the bank, the indictment by a federal grand jury in Norfolk, Va., said.
Prosecutors say the scheme contributed to the failure of the bank in 2011, which the Federal Deposit Insurance Corporation estimates will cost the FDIC deposit-insurance fund $268 million.
"The Bank of the Commonwealth's high risk lending practices resulted in soaring losses after the 2008 financial crisis. Led by former CEO and Board Chairman Edward Woodard, these bank insiders and their favored borrowers allegedly conspired to hide the rapidly deteriorating financial condition of the bank through fraud," Neil MacBride, U.S. Attorney for the Eastern District of Virginia, said Thursday.
Woodward's son, Troy, and executive vice presidents Simon Hounslow and Stephen Fields are charged in a 25-count indictment made public after the four bank officers and two borrowers -- Thomas E. Arney and Dwight A. Etheridge -- were taken into custody.
Edward J. Woodard, 69, served as the bank's chief executive officer and chairman of the board for more than three decades until he was forced to step down as chairman in April 2010 and forced to retire from the bank in December 2010, prosecutors said.
Woodard is charged with conspiracy to commit bank fraud, bank fraud, false entry in a bank record, multiple counts of unlawful participation in a loan, multiple counts of false statement to a financial institution and multiple counts of misapplication of bank funds.
From 2008 up to its closing in 2011, the bank lost nearly $115 million. The indictment alleges that the bank's failure will cost the federal government through the deposit insurance fund in excess of $260 million. The forfeiture notice in the indictment attributes at least $71 million as illegal proceeds of the fraud.