A former executive at the defunct Appalachian Community Bank in Ellijay, Ga., was sentenced to prison Friday for running a fraudulent loan scheme.
A federal judge sentenced Adam Teague, a former senior vice president of the bank, to five years in prison and ordered him to repay more than $5.8 million for conspiring to defraud the bank. He pleaded guilty to the charges in August 2012.
From 2007 through 2009, Teague used loans from Appalachian Community to finance his own business dealings and failed to disclose conflicts of interest. He also created shell companies and recorded fake transactions to cover up the loans and losses.
Appalachian Community, which had assets of $1 billion, failed in March 2010. It was seized by the Federal Deposit Insurance Corp. and sold to Community & Southern Bank in Carrollton, Ga. The failure cost the FDIC approximately $419 million.
"Bank fraud is a critical problem throughout the United States, but it has hit Georgia especially hard," U.S. Attorney Sally Yates said in a news release. "Our state has led the nation in bank failures since 2008, with 85 banks failing — including this one. This bank was robbed from the inside, not by a bandit carrying a gun, but a bank officer carrying a pen."
The case was investigated by the special inspector general for the Troubled Asset Relief Program, the FBI, the FDIC and the Federal Housing Finance Agency.
