The former chairman of NOVA Bank in Berwyn, Pa., was sentenced to 11 months in prison for his role in a fraud scheme involving the Treasury Department's Troubled Asset Relief Program.
Barry Bekkedam, 49, was sentenced for defrauding $13.5 million from the program. Bekkedam was also fined $100,000 by U.S. District Judge C. Darnell Jones II.
Bekkedam and other investors formed NOVA in 2002. Bekkedam, who also owned and operated the financial advisory company Ballamor Capital, was the chairman until 2007.
According to federal prosecutors, NOVA Financial Holdings applied for about $13.5 million in Tar funds as the bank faced the risk of failure in 2008 due to bad loans and investments. NOVA received approval for Tarp funds in June 2009 on the condition that it raise $15 million of private capital. Bekkedam was accused of arranging for NOVA to loan money to three individuals to transfer to the bank's parent company to make it appear as though the bank had new capital from an outside investor.
"TARP is intended for healthy banks,” Christy Goldsmith Romero, special inspector general for Tarp, said in press release. “NOVA was not a healthy bank. As NOVA's founder, Bekkedam wielded enormous influence over the bank, allowing him to orchestrate a conspiracy with its CEO to cook the bank's books to make it appear that the bank had healthy capital levels.”
NOVA never received the Tarp funds. The bank failed, and state and federal banking regulators closed it in October 2012.
"I vehemently maintain my innocence and I plan to appeal," Bekkedam said in a prepared statement. "I look forward to presenting the unadulterated facts to the Court of Appeals, and I am confident that the truth will prevail."
Hartline was sentenced in November to 14 months in prison and fined $50,000 for his role in the scheme.