KANSAS CITY, KAN. – A Johnson County man pleaded guilty in federal court Monday to taking part in a fraud scheme that cost the Bank of Blue Valley more than $877,000, U.S. Attorney Barry Grissom said.
Timothy P. Fitzgerald, 56, Leawood, Kan., pleaded guilty to one count of conspiracy to commit bank fraud. In his plea, he admitted the crime took place while he was chief financial officer of KC United, LLC, which was a holding company for five construction services companies located in Kansas City, Kan.
KC United was a loan customer of the Bank of Blue Valley. In 2008, KC United was losing money. Fitzgerald and other conspirators knew that KC United needed to show a profit in order to maintain its bank and bonding relationships. So Fitzgerald and others manipulated KC United’s quarterly financial statements to falsely reflect a profit. Fitzgerald delivered the falsified reports to the Bank of Blue Valley, which relied on the false information to renew the company’s line of credit. Fitzgerald and other conspirators also prepared annual financial statements that contained falsified profits and a cover letter falsely stating that an outside accounting firm had reviewed the statement. They placed the cover letter on the letterhead of an outside accounting firm.
On April 28, 2011, three of the companies owned by KC United filed for Chapter 11 bankruptcy. The Bank of Blue valley sold its position in the remaining outstanding loan to KC United, sustaining a loss of more than $877,000.
Blue Valley Ban Corp., the holding company for Bank of Blue Valley received more than $21 million in funding from the U.S. Treasury’s Troubled Asset Relief Program (TARP).
“Bank of Blue Valley did not repay TARP and missed 18 quarterly dividend payments totaling $4.9 million, money owed to taxpayers as a result of the bank holding TARP funds,” said Christy Romero, Special Inspector General for TARP (SIGTARP).
“Treasury sold its TARP investment in the bank at a principal loss of nearly $500,000, a loss in addition to uncollected TARP dividend payments,” Romero added.Sentencing will be set for a later time. Fitzgerald faces a maximum penalty of 30 years in federal prison and a fine up to $1 million. Grissom commended the U.S. Department of Labor – OIG, the U.S. Department of Labor – EBSA, IRS Criminal Investigations, the FBI, the Special Investigator General for the Troubled Asset Relief Program investigated and Assistant U.S. Attorney Jabari Wamble for their work on the case.