Former Covington Bank CEO Pleads Guilty to Bank Fraud and False Statements

NEW ORLEANS—Richard S. Blossman, Jr., age 52, a resident of Covington, Louisiana, plead guilty today before U.S. District Judge Nannette Jolivette Brown to a two-count bill of information alleging one count of bank fraud and one count of false statements, announced U.S. Attorney Jim Letten. He is scheduled for sentencing on November 15, 2012.

According to documents filed in court today, Blossman was the chief executive officer (CEO) of Central Progressive Bank, headquartered in Lacombe, Louisiana, in St. Tammany Parish. In December 2011 Central Progressive Bank (CPB) failed and was taken over by the Federal Deposit Insurance Corporation (FDIC). The assets of Central Progressive Bank were then sold to FNBC Bank.

Count one of the bill of information alleges that Blossman caused Central Progressive Bank to purchase a yacht valued at $200,000 from a distressed property website. Blossman then, through a surrogate, formed a strawman company to purchase the vessel from a subsidiary of Central Progressive Bank for less than $30,000. The strawman company was formed to hide Blossman’s ownership of the yacht. Blossman then subsequently sold the boat for approximately $130,000 in 2005. The bill of information further alleges that Blossman instructed a branch of Central Progressive Bank to cash the $130,000 check and to give the cash to his designee. Blossman ultimately received some of the cash.

Count two of the bill of information alleges that in March 2007, Blossman, as CEO of Central Progressive Bank, issued a $5,000 bonus to 11 of the members of the board of directors’ of Central Progressive Bank. Although the bank minutes reflected that the bonus was for the directors continued support and hard work for the bank, the $5,000 per director bonus was really an illegal campaign contribution. The next calender day, the bank deposited $5,000 into the 11 directors’ accounts, but had each account subsequently debited for $5,000 and a $5,000 bank check in the name of each individual director was sent to a campaign for a total of $55,000 from CPB. Blossman signed a factual basis in which he admitted committing the crimes, as well as admitting guilt in open court.

Blossman faces a maximum term of 30 years’ incarceration on each count, a maximum fine of $1,000,000, and a maximum of five years of supervised release.

The case was investigated by the Federal Deposit Insurance Corporation-Office of Inspector General and the Federal Bureau of Investigation and was prosecuted by Assistant U.S. Attorney Carter K. D. Guice, Jr.