The former chief executive officer of Virginia's Bank of the Commonwealth was among six people indicted for an alleged fraud conspiracy involving a coverup of the bank's financial condition from 2008 to 2011.

Edward Woodard, 69, who ran the bank for more than three decades, was charged in a 25-count indictment unsealed today in federal court in Norfolk, Virginia. Three other former bank executives and two borrowers were also charged.

"Bank insiders were unwilling to fully acknowledge the deterioration in the bank's loan portfolio," according to the indictment. "They were concerned that the bank's declining health would negatively impact investor and customer confidence, and that capital erosion would affect the bank's ability to accept and renew brokered deposits."

The executives concealed shortfalls by overdrawing demand-deposit accounts to make loan payments and extending new loans or additional principal on existing loans to cover payment deficiencies, the U.S. charged in the 51-page indictment.

Prosecutors are seeking $71 million in criminal forfeiture.

Woodard is charged with conspiracy to commit bank fraud, bank fraud, false entry in a bank record, unlawful participation in a loan, false statements to a financial institution and misapplication of bank funds. Each charge carries a maximum penalty of 30 years in prison.

Government Cost

From 2008 until it closed in 2011, the Norfolk-based bank lost almost $115 million. The bank's failure will cost the U.S., through the Federal Deposit Insurance Corp., more than $260 million, according to the indictment.

Peter Carr, a spokesman for U.S. Attorney Neil MacBride in Alexandria, Virginia, declined to comment on the indictment pending a news conference later today.

Andrew Sacks, a lawyer for Woodard, said his client will plead not guilty to the charges, which he called "absolutely unfounded." He said Woodard turned himself in to law enforcement this morning and he expects that he'll be released on bond later today.

"Ed Woodard devoted a lifetime to being a professional banker," Sacks said in a telephone interview. "He has an outstanding reputation. It's incredible to believe he would commit any type of fraud."

The case is U.S. v. Woodard, 12-cr-00105, U.S. District Court, Eastern District of Virginia (Norfolk).

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.