A federal jury convicted three former executives at the failed Bank of the Commonwealth in Norfolk, Va., of hiding the bank's bad assets for their own gain.
Former chief executive Edward Woodward was found guilty of bank fraud by a Norfolk jury, the special inspector general of the Troubled Asset Relief Program said Friday. Two other former executives of the bank and one real estate developer who worked with the bank were convicted of conspiring to commit bank fraud, counts that each carries a maximum of 30 years in prison. The four men will be sentenced in September.
The four were found guilty of hiding the Bank of the Commonwealth's bad loans by overdrawing demand deposit accounts and using income from other assets to make loan payments. They also altered documents to understate the bank's troubles.
In addition to Woodward, the three convicted were Woodward's son Troy, who was vice president and mortgage loan specialist at one of the Bank of the Commonwealth's wholly owned subsidiaries; former executive vice president and commercial loan officer Stephen Fields; and Dwight Etheridge, a real estate developer who worked with the bank. The former chief lending officer, Simon Hounslow, was acquitted of all charges.
Bank of the Commonwealth was seized in September 2011 in a failure that cost the Federal Deposit Insurance Corp. approximately $268 million. The bank applied to receive $28 million through Tarp in November 2008, but withdrew its application after the Federal Reserve raised concerns about the bank's health. The bank lost $115 million from 2008 through its 2011 failure.
"Today's verdict is justice served for a massive bank fraud conspiracy at Bank of the Commonwealth," the special inspector general for Tarp, Christy Romero, said in a news release.