Three Sentenced on Conspiracy, Insider Trading, and Tax Evasion Charges
|U.S. Attorney’s Office November 06, 2013|
ATLANTA—Douglas Ballard, Guy Mitchell, and Joseph Todd Foster have been sentenced for their roles in a conspiracy to commit bribery and bank fraud, insider trading, and tax evasion that occurred at the now-failed Integrity Bank.
“Our nation’s financial crisis was fueled in part by bank insiders and major borrowers whose greed led them to break the law,” said United States Attorney Sally Quillian Yates. “The conduct of these defendants, two of whom once held prominent positions in banking, helped pave a path to the shocking number of bank failures Georgia has experienced in the last 10 years.”
Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office, stated, “The magnitude and impact of this financial institution based fraud case clearly illustrates why these types of criminal investigations are a priority matter at the FBI. We will continue to work with our various investigative partners to identify, investigate, and present for prosecution those individuals who betray their positions of trust within these institutions for the sake of personal greed.”
“The sentence today does not replace the losses that were incurred due to this scheme,” stated Veronica F. Hyman-Pillot, Special Agent in Charge with IRS-Criminal Investigation. “However, today’s sentence is a message to others that regardless of who you are, there are consequences for committing these types of crimes.”
“The FDIC OIG is pleased to join the U.S. Attorney’s Office and our law enforcement colleagues in announcing the sentencing of individuals whose criminal actions caused serious harm to Integrity Bank,” said Fred W. Gibson, Jr., Acting Inspector General, Federal Deposit Insurance Corporation. “It is particularly troubling to the FDIC OIG when a bank insider like Mr. Ballard, who is entrusted with operating the bank in a safe and sound manner, violates that trust and engages in activities that contribute to losses to the Deposit Insurance Fund. Mr. Mitchell’s sentencing should deter others who face similar opportunities to conspire with bank insiders in such criminal behavior. Today’s sentencing confirms that those who undermine the integrity of the financial system will be brought to justice and held accountable for their crimes.”
According to United States Attorney Yates, the charges, and other information presented in court: Ballard, a former executive vice president at the now-failed Integrity Bank, formerly headquartered in Alpharetta, Georgia, received more than $200,000 in cash bribes from Mitchell, the bank’s largest borrower. At the same time in 2006, when Ballard was being bribed, he allowed Mitchell to draw more than $7 million from a loan that was supposed to be used for renovation and construction at the Casa Madrona Hotel in Sausalito, California, despite the fact that no renovation or construction work was done. Instead, Mitchell used the money to buy an island in the Bahamas, travel by private jet, purchase Miami Heat basketball tickets, buy fancy jewelry and expensive cars, and purchase a mansion in Coconut Grove, Florida.
Mitchell received $20 million in additional business loans from Integrity Bank after the Casa Madrona loan proceeds were exhausted, and he continued to use some of that money for impermissible, personal expenses. Mitchell defaulted on the loans, and Integrity Bank eventually failed.
Foster was Integrity Bank’s vice president in charge of Risk Management. He sold nearly all his Integrity stock in August 2006 based on materially adverse information about the company that was not available to the public. Specifically, Foster knew that the bank was in an increasingly precarious position because of Mitchell’s financial difficulties and pending default.
Ballard, Mitchell, and Foster were sentenced by United States District Judge Julie Carnes.
Douglas Ballard, 44, was sentenced to serve two years and six months in federal prison, to be followed by three years of supervised release. He was ordered to pay restitution in the amount of $1,000,000 and a special assessment of $200. Ballard pled guilty to conspiracy to commit bank fraud and bribery and to income tax evasion on July 6, 2010.
Guy Mitchell, 54, of Miami, Florida, was sentenced to five years in prison, to be followed by three years of supervised release. He was ordered to pay restitution in the amount of $5,661,650, a fine of $250,000, and a special assessment of $100. Mitchell pled guilty to conspiring to commit bank fraud and bribery on July 1, 2013.
Joseph Todd Foster, 46, of Blakely, Georgia, was sentenced to three years of probation, and 120 hours of community service. He was also ordered to pay a $100 special assessment. Foster pled guilty to securities fraud on July 6, 2010.
This case was investigated by special agents of the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation Office of Inspector General, and the Internal Revenue Service.
Assistant United States Attorneys Douglas W. Gilfillan and Christopher C. Bly prosecuted the case.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.