News and Press Releases

Mislead Auditors about Financial Health of Loan Customer

September 24, 2007

RORY J. O’FLAHERTY, 41, of Seattle, Washington, was sentenced September 21, 2007, in U.S. District Court in Seattle to 6 months in custody, 3 years of supervised release and 250 hours of community service for Making False Entries in Bank Records. U.S. District Judge Ricardo Martinez said 3 months of O’FLAHERTY’s custody time would be in prison and 3 months under home electronic monitoring. O’FLAHERTY, a former senior executive officer and division manager at Banner Bank in Woodinville, Washington, admits he placed false documents in the loan file of one of the bank’s customers.

According to the plea agreement, O’FLAHERTY was employed at Banner Bank and its predecessor bank from 1994 to 2001. O’FLAHERTY oversaw bank loans to Baycrest Industries, Inc. Shortly before the bank’s internal credit examination in 2001, O’FLAHERTY placed fictitious statements in the loan file. One statement indicated that the brother-in-law of one of Baycrest’s principals had offered a guarantee of $600,000. O’FLAHERTY also placed a brokerage statement in the loan file indicating that the man who had offered the guarantee had an account value of more than $3.2 million. These false documents were intended to deceive the bank and reassure auditors that the loan was sound.

At sentencing Judge Martinez noted that “this was a total abuse of trust. You credited the accounts of troubled clients with funds from unrelated clients.... After you were discovered you came sneaking back to the bank to hide what you had done.”

This case was investigated by the FDIC Office of Inspector General, Investigations and the FBI. The case is being prosecuted by Assistant United States Attorney J. Tate London.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110.

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