New York Investment Firm CEO Guilty of Defrauding 50+ Investors in Multi-Million Dollar Pre-IPO Scam
A former bank president entered a guilty plea today for his role in a bank fraud scheme in which he hid underperforming and at-risk loans from the bank and the Federal Deposit Insurance Corporation (FDIC), among others, announced Acting U.S. Attorney G.F. Peterman, III of the Middle District of Georgia.
Gary Patton Hall Jr., 49, of Tifton, Georgia, pled guilty before Senior U.S. District Court Judge Hugh Lawson in Macon, Georgia to one count of conspiracy to commit bank fraud and one count of conspiracy to commit fraud against the United States.
According to facts stipulated in the plea agreement, Mr. Hall was the president and Chief Executive Officer of Tifton Banking Company (TBC) from August 2005 until June 2010. During that time, Mr. Hall was engaged in an ongoing scheme to mislead the bank and its loan committee about loans TBC made to local individuals and businesses. As part of the scheme, Mr. Hall hid past due loans from the FDIC and the TBC loan committee, which resulted in the bank continuing to approve and renew delinquent loans and loans for which the collateral was lacking. Several of the borrowers eventually defaulted on the loans, resulting in millions of dollars in losses to TBC and others.
Mr. Hall admitted that in certain transactions in which he exercised approval authority, Mr. Hall hid his personal and business interests. In one instance, Mr. Hall approved loans to the buyer of a condominium in Panama City Beach, Florida, owned by Mr. Hall himself. In doing so, he made false representations about the loans to TBC's loan committee and failed to disclose his personal interest in the transaction. When the buyer's loan payments became delinquent, Mr. Hall hid the loans from both the FDIC and state regulators. Mr. Hall received $50,000 profit from the sale of his condominium in this transaction, the entire purchase price being funded by an unsecured loan to the buyer approved by him. The buyer eventually declared bankruptcy resulting in a loss of more than $400,000 to TBC.
Mr. Hall also admitted to making fraudulent representations which led to commercial loan guarantees being issued by the United States Small Business Administration and the United States Department of Agriculture on two other loan transactions. The loans were made by TBC, and guaranteed by the government agencies, to refinance earlier non-performing commercial loans made by TBC as part of the scheme to mislead bank regulators and hide the bank's true financial condition. Those guaranteed loans resulted in losses to the bank and the agencies of more than $2 million.
TBC was closed by the Georgia Department of Banking and Finance in November 2010 due to its poor financial condition. At that time, TBC had not repaid the $3.8 million it received from the Department of Treasury's Troubled Asset Relief Program.
Mr. Hall faces a potential statutory penalty often (10) years imprisonment and a potential fine of up to twice the loss amount, or both. Hall agreed in entering the plea that he owes restitution to the bank and federal agencies in the amount of $3,931,018 for losses suffered.
Acting United States Attorney G.F. Peterman, III said, "The greed of Mr. Hall and the abuse of the trust placed in him by the Tifton Banking Company and its depositors, investors, and employees, as well as the taxpayers of the United States, has had a deleterious effect on his community and its faith in the banking industry. Others have paid a high price for his misdeeds. Hopefully today's plea of guilty to his crimes can facilitate some degree of healing for those he has harmed."
"While the taxpayer entrusted Hall, the President and CEO of Tifton Banking Company, with 3.8 million of TARP funds, Hall abused that trust to deceive the banking regulators, the public and the bank's loan committee," said Christy Goldsmith Romero, Special Inspector General for TARP (SIGTARP). "Hall covered up past due loans to mask the poor financial condition of the bank and hid his personal and business interests in loans. His crime directly caused over 3.9 million in losses to the bank and federal agencies. Tifton Banking Company failed in 2010 causing a total loss to the taxpayer of the 3.8 million in TARP funds plus over 50 thousand dollars in missed dividends. SIGTARP and its law enforcement partners will continue to investigate vigorously the financial industry and bankers to bring accountability and justice for TARP-related crime."
Jason T. Moran, Special Agent in Charge, FDIC Office of lnspector General, stated: "The Federal Deposit Insurance Corporation Office of Inspector General is pleased to have joined the United States Attorney's Office and our law enforcement colleagues in investigating the fraud that led to the conviction of Mr. Hall. It is particularly troubling when bank insiders violate the public trust and engage in activities that impact the safety and soundness of our nation's banks."
The case was investigated by the FBI, the Special Inspector General for the Troubled Asset Relief Program, the Small Business Administration's Office of the Inspector General, the Federal Deposit Insurance Corporation's Office of the Inspector General, the Department of Agriculture's Office of Inspector General and the Tift County Sheriff’s Office. The case is being prosecuted by Senior Trial Attorney N. Nathan Dimock of the Criminal Division's Fraud Section and Assistant U.S. Attorney Robert McCullers of the Middle District of Georgia.
"The SBA Office of Inspector General will aggressively investigate and seek criminal prosecution or civil remedies when fraud is perpetrated against the SBA by corrupt lenders," said Inspector General Peggy E. Gustafson. "SBA's loan programs are designed to provide eligible small businesses access to capital to finance and grow their businesses, not those engaged in illegal activity. I would like to thank the U.S. Attorney's Office for its dedicated leadership and professionalism throughout this investigation."
Questions concerning this case should be directed to Pamela Lightsey, Public Information Officer, United States Attorney's Office, at (478) 621-2603.