WASHINGTON - The Federal Deposit Insurance Corp. has charged four former executives at the failed First National Bank of Keystone of West Virginia with embezzling $19.9 million.

The agency claims in a lawsuit that former Keystone vice president Terry L. Church, Keystone Mortgage Corp. president Michael H. Graham, retired bank president and Keystone Mayor Billie Cherry, and the late bank president J. Knox McConnell steered themselves millions of dollars of due diligence payments.

The civil suit, filed Friday in U.S. District Court for the Southern District of West Virginia, said the officials created shell corporations to secretly distribute bank assets to family and friends. A federal judge has set a hearing for Monday in Charleston and frozen the defendants' assets.

The suit also accused four former Keystone directors of "gross negligence," saying that their failure to adequately investigate the bank's activities allowed the executives to misappropriate funds.

In a related case, U.S. District Judge David A. Faber on Monday sentenced and fined Ms. Church and Mr. Graham for obstructing bank examiners. Both were convicted in May of attempting to destroy and bury bank documents to keep them from regulators. To date these are the only criminal charges that have been brought in connection with the Keystone failure.

Ms. Church was sentenced to a four-year, nine-month term in federal prison and fined $100,000 for three counts of obstruction. Mr. Graham was sentenced to four years and three months and fined $7,500 for one count of obstruction. Both defendants were also given three years' probation.

The FDIC says the bank's failure will cost between $750 million and $850 million, one of the 10 most expensive ever. Federal regulators closed the bank in September, alleging massive fraud.

The FDIC blamed the unusually high losses on the disappearance of more than $500 million of loans that bank officials had counted as assets, and on the bank's inflated estimate of the value of its residual interest in loans it securitized and sold.

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