Two officers of an Arizona mortgage lender are going to prison for defrauding a Troubled Asset Relief Program recipient.
Scott Powers, former CEO of American Mortgage Specialists, was sentenced to serve eight years, and David McMaster, a former officer of AMS, was sentenced to15 years, according to a press release issued Monday by the special inspector general for Tarp and other federal officials. Powers and McMaster pled guilty in October to defrauding BNC National Bank in Bismarck, N.D.
Each also was ordered to pay $28.6 million to the government and an equal amount to BNC.
The executives' scheme cost the bank $28 million and left it unable to make its required dividend payments to Tarp for three years, the release said. BNCCorp (BNCC), the bank's parent company, received $20 million through the program in January 2009.
Powers and McMasters defrauded BNC by lying about AMS' finances, especially its sale of loans, from October 2007 to April 2010, the release said.
"American taxpayers invested $20 million of Tarp funds in BNC to stabilize the bank, not to provide an opportunity to fund crime," Christy Romero, the special inspector general for TARP, said in the news release. Authorities "will bring to justice and hold accountable those who look at Tarp as an opportunity to finance criminal activity."
The investigation was conducted by agents of the special inspector general's office and the Federal Housing Finance Agency Office of Inspector General.