January 30, 2006
www.usdoj.gov/usao/aln
FORMER COMMUNITY BANK CEO AND VICE PRESIDENT ORDERED TO PAY $1.7 MILLION IN RESTITUTION IN BANK FRAUD SCHEME
BIRMINGHAM, AL: United States District Court Judge Sharon Lovelace Blackburn ordered former Community Bank CEO KENNON R. PATTERSON, SR. and former Community Bank Vice President LARRY E. BISHOP to pay $1,776,974.24 in restitution to Community Bank. A jury convicted PATTERSON, BISHOP, and co-defendant JIMMIE D. CHILDERS of conspiracy bank fraud, and causing false entries in bank records on March 10, 2005. PATTERSON was also convicted of filing false income tax returns.
“Today’s order of restitution is designed to compensate the bank for the harm caused by these defendants. We will take every step possible to recover all available monies for the victim, Community Bank” stated United States Attorney Alice H. Martin. “Justice has prevailed.”
PATTERSON, BISHOP, and CHILDERS were indicted on October 31, 2003, on charges that they engaged in a scheme to defraud Community Bank that occurred from December 1997 until January 2002. PATTERSON owned Heritage Valley Farms, a 900 acre parcel of property located in Blountsville. During the time period of the scheme, BISHOP served as Community Bank’s vice president of Construction and Maintenance. CHILDERS owned and operated J&M Materials, Inc. (“J&M”), an excavating company in Oneonta.
Evidence presented during the seven-week trial established that CHILDERS and other subcontractors, including Dewey and Linda Hamaker of Morgan City, Alabama and their company, Morgan City Construction, Inc. (“MCC”) performed construction services on Heritage Valley Farms. They then submitted invoices for payment to Community Bank for those services. BISHOP approved those fraudulent invoices and caused Community Bank to pay in excess of $1.9 million to J&M and MCC, primarily to fund construction at Heritage Valley Farms. Foremost among the projects funded with Community Bank money was a 17,000 square foot house PATTERSON was constructing at Heritage Valley Farms. Evidence at trial revealed that the scheme also resulted in Community Bank money being paid to fund construction services provided at various other locations owned by PATTERSON and his family, including residences in Auburn and Leeds and a separate farm in Blountsville owned by PATTERSON and another individual. The Court found that approximately $125,000 of the $1.9 million in fraud related to overbillings by MCC to fund various construction projects owned by the Hamakers, and did not order PATTERSON and BISHOP to pay restitution on those amounts.
On December 13, 2005, Judge Blackburn sentenced PATTERSON to 60 months incarceration for his role in the fraudulent scheme. On January 26, 2006, BISHOP was sentenced to 48 months imprisonment and CHILDERS was sentenced to 21 months imprisonment. CHILDERS was also ordered to pay $238,235 in restitution for his role in the scheme. A federal jury convicted Dewey and Linda Hamaker of conspiracy and bank fraud in October 2002. Dewey and Linda Hamaker were both sentenced in May of 2003, to 18 months incarceration.
This case was investigated by Special Agents of the Federal Bureau of Investigation, the Internal Revenue Service - Criminal Investigation Division, and the Federal Deposit Insurance Corporation, Office of Inspector General. This case was prosecuted by Assistant U.S. Attorney William C. Athanas.