Former First NBC executives charged with fraud tied to bank's failure
Three former executives at First NBC Bank, including its founder and CEO, have been indicted for conspiracy to commit fraud in connection with the New Orleans bank’s failure in April 2017.
Ashton Ryan, William Burnell and Robert Brad Calloway were accused of working with borrowers from 2006 to 2017 to defraud the bank, the U.S. Attorney’s Office said in a Friday press release.
The indictment alleges that the bankers “conspired to defraud First NBC Bank by disguising the true financial status of certain borrowers and their troubled loans [and] concealing the true financial condition of the bank from the board, auditors, and examiners.”
The release identified the other borrowers, including Gregory St. Angelo, First NBC’s former general counsel, as part of the alleged conspiracy. Each has been charged; three of the individuals, including St. Angelo, have pleaded guilty.
Ryan, Burnell and Calloway were accused of “repeatedly” extending loans to borrowers that included false statements and documentation, including statements about the purpose of the loans. Some of the documents inflated the value of borrowers’ collateral, the charges claim.
“When the borrowers were unable to pay those loans, Ryan, Burnell and Calloway made new loans to these same borrowers and then used the proceeds from those new loans to pay the existing loans,” the U.S. Attorney’s Office claims. “This created the false impression that the borrowers were able to pay their loans.”
The indictment claims that the bankers “received millions of dollars in compensation from the bank during the course of the conspiracy.” Ryan allegedly received personal benefits from three borrower relationships, the release said.
When First NBC failed, the borrowers collectively owed $260 million. The Bank’s failure cost the Federal Deposit Insurance Corp.'s Deposit Insurance Fund roughly $1 billion.
The indictments “should be a deterrent for others interested in participating in fraudulent schemes that affect our financial system,” Bryan Vorndran, the FBI’s New Orleans special agent in charge, said in the release.