Pair Of Former Bank Executives Sentenced In Federal Court
Gary Lawson And Kenneth Hart Will Each Spend Time In Prison
ABINDGON, VIRGINIA -- A pair of former executives for New Peoples Bank (NPB), who each previously pled guilty to charges related to insider trading, were sentenced today in the United States District Court for the Western District of Virginia in Abingdon.
Kenneth D. Hart, 63, of Honaker, Va. and Gary A. Lawson, 58, of Lebanon, Va., were each sentenced this morning in separate hearings. Both defendants previously waived their rights to be indicted and pled guilty to separate criminal informations.
In October 2010, Hart pled guilty to one count of conspiracy to defraud the United States and one count of money laundering. In January 2011, Lawson pled guilty to the same charges. This morning in U.S. District court, both Hart and Lawson were sentenced to 24 months of incarceration, to be followed by three years of supervised release. In addition, both defendants were ordered to pay a $7,500 fine and pay $6,420 in remaining restitution payments.
“Instead of protecting the assets of the customers of the New Peoples Bank, Mr. Hart and Mr. Lawson used inside information to line their own pockets,” United States Attorney Timothy J. Heaphy said today. “This case is a prime example of the need for the vigorous enforcement of the laws that guard against insider trading. Our office will continue to use all resources available to protect our banking system from those whose greed causes them to violate the trust of others.”
Hart, along with several family members and friends, formed NPB on October 29, 1998. Shortly after, Lawson joined the group in an executive position. Since its inception, Hart has served as the president and CEO of the bank. Under his leadership, NPB provided training to his bank officers and board members regarding insider trading. Officers, directors and employees were prohibited from trading in the company’s stock while in possession of material, non-public information about NPB. In addition, the bank would announce blackout periods during which officers and board members, as well as friends and family members, were prohibited from trading.
Hart and Lawson have admitted that they engaged in insider trading in order to enrich themselves. Specifically, on July 10, 2008, a bank customer contacted an NPB branch manager in West Virginia to express his interest in acquiring 500,000 shares of stock. The customer said he was willing to pay $12 per share for a total investment of $6,000,000. The branch manager contacted the Abingdon, Virginia branch of NPB and ultimately Hart was notified of the customer’s proposal.
Hart and Lawson have also admitted that over the next month or so, they used this insider information to aid and assist family members and friends in obtaining $12 per share for their shares of NPB stock. The NPB board of directors was never advised of the proposed acquisition of a large block of NPB stock.
In order to facilitate the scheme, Lawson and Hart, directed a not named co-conspirator to open a checking account under the name F.D. Owens, Jr. Investment Account. Three deposits were made into that account totaling $6,600,000. The source of these funds were cashiers checks remitted by the bank customer and for the purpose of purchasing NPB stock. Checks were then written out of the F.D. Owens account to pay friends and family members of the defendant for their sold stock.
The investigation of the case was conducted by the Bristol, Virginia Office of Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorney C. Patrick Hogeboom III is prosecuting the case for the United States.