New Orleans Business Owner Sentenced for Conspiracy to Defraud First NBC Bank

NEW ORLEANS – United States Attorney Duane A. Evans announced that KENNETH CHARITY (“CHARITY”), age 58, a resident of New Orleans, was sentenced on October 18, 2023, by U.S. District Judge Lance Africk to 20 months in prison for conspiring to defraud First NBC Bank (FNBC), the New Orleans-based bank that failed in April 2017.

According to court documents, from February 2007 through April 2017, CHARITY had a banking relationship with FNBC.  During that time, FNBC President, Ashton Ryan, acted as the loan officer for CHARITY and certain of CHARITY’s entities.  By the time FNBC failed, the balances on the loans issued to CHARITY and the entities, totaled more than $16 million.  CHARITY, Ryan, and others, knowingly conspired to defraud FNBC by disguising and misrepresenting the true financial status of CHARITY and his entities, as well as the purpose of the loans issued to them.

CHARITY admitted that he, Ryan, and others carried out the conspiracy by repeatedly lying in bank loan documents about the purpose of loans that Ryan approved for CHARITY. Specifically, Ryan approved loans for CHARITY and his entities that appeared to be for legitimate business purposes.  In reality, CHARITY spent loan proceeds on personal expenses, and Ryan was aware that CHARITY did not spend the loan proceeds consistent with the loans’stated purposes.  For example, from in or around August 2014 through in or around December 2016, Ryan caused three loans to be disbursed to one of CHARITY’s entities for the purpose of, in part, enclosing a patio at a beignet shop.  CHARITY never built the patio.  Instead, the loan proceeds were used to pay CHARITY’s overdrafts, including personal expenses, and to make loan payments.  Ryan was convicted at trial in February 2023, for bank fraud and other offenses related to the CHARITY loans.

In addition to prison, Judge Africk sentenced CHARITY to three years of supervised release. Judge Africk also ordered CHARITY to pay $16,502,831.55 in restitution to the FDIC, along with a mandatory special assessment fee of $100.

U.S. Attorney Evans praised the work of the agencies that conducted this years-long investigation: the Federal Bureau of Investigation, New Orleans Field Office; the Federal Deposit Insurance Corporation, Office of Inspector General, Dallas Regional Office; and the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Office of Inspector General, Miami Field Office.  Assistant U.S. Attorneys Matthew R. Payne of the Financial Crimes Unit , Nicholas D. Moses, Healthcare Fraud Coordinator, J. Ryan McLaren of the Appellate Unit , and Rachal Cassagne of the Narcotics Unit, are in charge of the prosecution.