Officer of now defunct new frontier bank pleads guilty to charges related to the bank's collapse
DENVER – Gregory William Bell, age 54, of Weld County, Colorado, pled guilty yesterday before Senior U.S. District Court Judge Lewis T. Babcock to one count of false bank entries, one count of bank misapplication, one count of bank fraud and one count of money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation and the FDIC-Office of the Inspector General announced. Bell, who appeared at the hearing free on bond, is scheduled to return on April 30, 2013 for sentencing. The judge continued Bell’s bond.
Bell was originally charged by Information on December 5, 2012. According to the facts contained in the Information as well as the stipulated facts contained in the plea agreement, Gregory Bell was an officer of New Frontier Bank, which was insured by the Federal Deposit Insurance Corporation. On October 31, 2005, Bell made a false entry in a bank book, report or statement with intent to defraud the bank and deceive one or more of the bank’s officers. Specifically, the defendant allegedly prepared a form entitled “Credit Presentation and Committee Approval” for a $5,583,500 loan to two individuals on which he failed to disclose that a certificate of deposit, the value of which was $106,759.00, which the two individuals pledged as collateral, in fact belonged to another individual and that Bell would benefit personally as a result of the loan. On March 14, 2008, Bell willfully misapplied approximately $662,045.79 of New Frontier’s funds.
On June 17, 2008, and continuing until September 9, 2008, Bell devised and participated in a scheme to defraud the bank and to obtain moneys owned by and under the custody and control of the bank by means of materially false and fraudulent pretenses. As part of the scheme, Bell, knowing that state and federal regulators had directed New Frontier Bank to raise capital, arranged for eight bank customers to borrow money from the bank and use the proceeds of those loans to purchase shares of bank stock so New Frontier could inject some of the money paid for the stock into the bank. As part of the scheme, Bell failed to disclose the deteriorating condition of the bank to its customers. He also prepared and caused others to prepare bank forms entitled “Credit Presentation and Committee Approval” for the eight loans described above. Bell failed to disclose on the credit presentation forms that proceeds of the loans would be used to purchase shares of stock in New Frontier Bancorp.
Bell also allegedly caused false and misleading statements to be included on the credit presentation forms. He presented the credit presentation forms to bank loan committees and caused other persons to present them to bank loan committees. As part of the scheme, Bell caused the bank to loan approximately $20,145,979.23 to the eight borrowers mentioned above, and caused those borrowers to use approximately $4,310,215.00 of those proceeds to purchase shares of stock in the bank. On August 29, 2008, Bell executed a scheme by causing the bank to transfer approximately $260,000.00 of the proceeds of one of the bank loans to an account of one of the borrowers of that loan.
On June 27, 2008, Bell conducted a financial transaction affecting interstate commerce. Specifically, he deposited a check in the amount of $160,000.00 into his account at the bank. The transaction involved the proceeds of a specified unlawful activity, knowing that the transaction was designed in whole or in part to conceal and disguise the source and the ownership of the proceeds of the unlawful activity.
Finally, the Information includes an asset forfeiture allegation, which states that Bell shall forfeit any real or personal property that was involved in the offenses, or any property constituting or derived from the proceeds obtained from the offenses, and any property traceable to any property involved in said offenses.
Bell faces one count of false bank entries, one count of misapplication, and one bank fraud. Each of those counts carry a penalty of not more than 30 years in federal prison and a fine of up to $1,000,000. He also faces one count of money laundering. If convicted of money laundering Bell faces not more than 20 years in federal prison and a fine of up to $500,000, or twice the value of the property involved in the transaction, whichever is greater.
“With this guilty plea, we are one step closer to addressing the fraud and abuse at New Frontier Bank that helped lead to its failure,” said U.S. Attorney John Walsh.
“The FBI will continue to aggressively investigate bank officers and directors when their criminal actions contribute to the failure of financial institutions,” said FBI Denver Special Agent in Charge James Yacone.
“These failures can have a significant impact on the stability of our banking system, and it is the FBI’s duty to investigate bank personnel who violate their fiduciary obligations to the institution and depositors.”
“The IRS, along with our law enforcement partners, will vigorously pursue bank officers and others who defraud banks,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
“The Federal Deposit Insurance Corporation Office of the Inspector General is pleased to join our law enforcement colleagues in announcing this guilty plea. We are particularly concerned when officers of a bank abuse their positions of trust and engage in schemes to deceive the regulators. We will continue to pursue such offenders in the interest of maintaining the integrity of our nation’s banks and protecting the Deposit Insurance Fund,” said FDIC Inspector General Jon T. Rymer.
This case was investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service – Criminal Investigations (IRS-CI), and the Federal Deposit Insurance Corporation – Office of the Inspector General (FDIC-OIG).
The defendant is being prosecuted by Assistant U.S. Attorneys Suneeta Hazra.