Two former senior executives with the Federal Home Loan Bank of Dallas were sentenced to prison last week, capping a massive fraud investigation by a North Texas attorney general.
Terence Carlyle Smith, former president, and Nancy B. Parker, former chief information officer, were sentenced to five years each in prison for what authorities described as a $1.2 million scheme to defraud the bank built around falsified travel expenses. Both Smith and Parker pleaded guilty in July in the middle of their trial.
The executives made more than 30 trips between 2008 and 2013 and expensed about $780,000 in what they claimed were expenses for conferences, according to the Texas AG. In reality, authorities say, the two did not attend the conferences and the trips were personal. They featured “first class airfare, limousine services, concerts, vineyard tours, luxury hotel rooms, lavish meals, and expensive liquor and wine," the AG's office said.
All told, the executives racked up $780,000 in travel expenses and $450,000 in unused vacation benefits, according to the government.
“The actions of these defendants placed at risk the public’s trust in the Federal Home Loan Bank of Dallas,” said Catherine Huber, an official with the Federal Housing Finance Agency's Office of Inspector General. “The sentences handed down by the court send a powerful message to those who would seek to victimize a Federal Home Loan Bank.”
U.S. District Judge Jane Boyle ordered Smith to pay about $780,000 in restitution plus $4.2 million in legal fees. Parker will pay $314,000 in restitution and $228,000 in legal fees.
Michael Sims, the chief financial officer at the time of the fraud, was also indicted in 2017 for his role in the scheme but pleaded guilty before trial this past June. He faced up to three years in prison but instead received five years of probation and was ordered to pay about $80,000 in restitution.
