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Jackson, TN – A former Savanah, Tennessee bank CEO has pleaded guilty in federal court to a one count information charging him with conspiracy to commit bank fraud. Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee announced the guilty plea today.
According to the information presented in court, Christopher Brent Jerrolds, age 54, of Savanah, Tennessee was Central Bank’s Chief Executive Officer (CEO) and President until his termination from the bank in 2012. Jerrolds became the President and CEO of Central Bank in 1996 and a member of the Bank’s Board of Directors in 1998. According to the information, beginning in 2009 and continuing until March 2012, Jerrolds, acting in his capacity as President and CEO of Central Bank, gave preferential treatment to Tennessee Materials Corporation. As a result of the criminal conspiracy, Central Bank, Wayne County Bank, and First Metro Bank lost more than $9,000,000.
The information states that from March 31, 2009 until October 18, 2010, Jerrolds allowed TMC to deposit insufficiently funded checks ("bad checks") into TMC’s account at Central Bank. These "bad checks" were deposited into TMC’s account to cover overdraft balances in TMC’s account. When a previously deposited "bad check" in TMC’s account was returned for insufficient funds, another "bad check" drawn on one of TMC’s other bank accounts was deposited to replace the previously deposited "bad check(s)." The deposited amounts and the frequency of deposits increased each month, and at times, multiple checks were deposited on a single occasion.
By October 18, 2010, Jerrolds was responsible for accepting and approving TMC’s deposit of 161 "bad checks" with a total transaction amount of $116,169,218. The deposit of the "bad checks" created "false balances" in TMC’s account which enabled TMC to use funds in TMC’s checking account that belonged to Central Bank. The fraudulent account balances created by the deposit of the "bad checks" enabled TMC to take approximately $3.9 million dollars belonging to Central Bank, without the knowledge or approval of the Central Bank’s Board of Directors.
The information further states that on July 11, 2011, Jerrolds made a $1,079,338 advance to TMC without the knowledge and approval of the Bank’s Board of Directors. During the same time, Jerrolds released to TMC $500,000 that Central Bank held as security on a prior loan to TMC. Jerrolds released the monies to TMC despite the fact that TMC made no payments on the loan and without the approval of the Bank’s Board of Directors.
The information further provides that in 2011 and 2012 Jerrolds issued to TMC Letters of Credit in the amount of $2,000,000 and $1,783,000. Jerrolds, among other things, concealed the issuance of the Letters of Credit from Central Bank, did not enter the Letters of Credit into the books and records of Central Bank, and did not obtain approval from the Bank’s Board of Directors to issue the Letters of Credit. The borrower used the Letters of Credit as collateral to obtain a $2,000,000 dollar loan from Wayne County Bank and a $1,783,000 loan from First Metro Bank. Wayne County Bank and First Metro Bank made a demand on the Letters of Credit after the borrower defaulted on the loans.
Jerrolds faces a sentence of up to five years imprisonment, a fine of not more than $250,000 and a period of up to three years of supervised release. The Court can also order Jerrolds to pay restitution to Central Bank, Wayne County Bank and First Metro Bank. Jerrolds is scheduled to be sentenced by Judge Breen in Jackson, Tennessee on August 11, 2016.
This case was investigated by the Federal Deposit Insurance Corporaton and the Federal Bureau of Investigation. The government’s case is being prosecuted by First Assistant U.S. Attorney Larry Laurenzi .