The former chief executive of NOVA Bank in Berwyn, Pa., will serve more than two years in a federal prison for his role in a fraud scheme involving the Treasury Department's Troubled Asset Relief Program.

Brian Hartline, 51, was sentenced Monday to 14 months in prison for defrauding $13.5 million from Tarp. Hartline was also fined $50,000 by Pennsylvania U.S. District Judge Darnell Jones.

In April a jury in federal court in Philadelphia found Hartline and former NOVA Chairman Barry Bekkedam, 48, guilty of conspiracy to defraud, Tarp fraud and two counts of making false statements to the federal government. Bekkedam will be sentenced in January.

Hartline, Bekkedam and other investors established NOVA Bank in 2002. Bekkedam, who also owned and operated the financial advisory company Ballamor Capital, was the chairman of the bank’s holding company until 2007.

According to federal prosecutors, NOVA Financial Holdings applied for roughly $13.5 million in funds through Tarp as the bank faced the risk of failure in 2008 as a result of bad loans and investments. NOVA received approval for Tarp funds in June 2009 on the condition that the bank raise $15 million of additional, private capital. Hartline and Bekkedam were accused of making circular transactions to give the appearance that the bank had the funds necessary to qualify for Tarp.

"As part of the scheme, the defendants arranged for NOVA Bank to loan money to G.L., a Florida businessman, for G.L. to transfer to NOVA’s parent company so it would appear as though the bank had new capital from an outside investor," the U.S. Attorney’s Office in Eastern District of Pennsylvania said in a news release in April. "In fact, the ‘new money’ investment was the bank’s own money."

In October and December 2009, prosecutors said, Bekkedam and Hartline persuaded two others to make a similar "investment" using loans from the bank. Bekkedam and Hartline directed employees to tell the Treasury Department that the bank had raised the new capital when it hadn’t, prosecutors said.

NOVA never received the Tarp funds. The bank failed, and state and federal banking regulators closed it in October 2012.

"Pure and simple, CEO Hartline committed fraud in an attempt to get TARP," Christy Goldsmith Romero, the special inspector general for the relief program, said in a statement after Monday’s sentencing. "NOVA Bank was not a healthy bank when it applied for a TARP program for healthy banks. It was suffering major losses and lacked sufficient capital."

Hartline’s attorneys in the case, Fox Rothschild and Patrick Egan, said their client is innocent. The attorneys said in a statement that "the jury failed to understand the true nature of the complicated transactions" involved in the case and that Hartline "violated no laws and always acted in NOVA’s best interest," according to the Philadelphia Business Journal.

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