Former Bank Officers and Homebuilder Convicted of Bank Fraud

MCALLEN, TX—The former president and vice president of a McAllen-area bank and an area homebuilder have been convicted of bank fraud after pleading guilty yesterday, United States Attorney José Angel Moreno announced today.

Arsenio Alfaro, 45, and Elizabeth Aguirre 41, the former president and vice-president of Texas National Bank (TNB), and John Guzman, 33, a McAllen area homebuilder, each pleaded guilty to conspiracy to commit bank fraud as alleged in a superseding indictment returned by a federal grand jury on Dec. 28, 2010. Chief U.S. District Judge Ricardo Hinojosa, who accepted the guilty pleas and convicted each defendant, has set sentencing for July 1, 2011. All three face a maximum of 30 years in federal prison without parole and a $1 million fine. A fourth defendant charged in this case is set for trial in 2011, and is presumed innocent unless and until convicted through due process of law.

According to information presented in court, Guzman and one of his business associates—an alleged co-conspirator—owned several bank accounts at TNB beginning in December 2005. By the fall of 2006, the accounts had become overdrafted by thousands of dollars. Accordingly, then-TNB president Alfaro met with the alleged co-conspirator—with whom he had maintained a personal relationship—about resolving the overdrafted accounts and explained that an overdraft report, which listed all of the bank’s overdrafted accounts, was computer generated and circulated to TNB’s board of directors at the end of every month.

To conceal the overdrafts from the board, Alfaro agreed to allow checks from a closed account, previously held by Guzman’s alleged co-conspirator at another bank, to be deposited into the overdrafted accounts at the end of every month. The checks were to be made out in an amount greater than the negative balances in each account. While Alfaro knew these checks would be returned by the other bank for insufficient funds, the check deposits would make the accounts appear to be positive at the end of the month and, therefore, not reflected on the overdraft reports.

From September 2006 through May 2007, numerous checks were deposited into the overdrafted accounts to avoid the accounts being listed on the overdraft reports. Moreover, the accounts’ negative balances increased every month as a result of numerous debit transactions that were initiated, in part, by Guzman and approved by both Alfaro and Aguirre, who served as vice president at TNB. By May 2007, each account was overdrawn in excess of $100,000 which ultimately caused a loss of nearly $350,000 to TNB.

The investigation leading to the charges was conducted by FBI. Assistant United States Attorneys Greg Saikin and Jason Honeycutt are prosecuting the case.