Officer of Now-Defunct New Frontier Bank Charged with Fraud and Money Laundering in Connection with the Bank’s Collapse
|U.S. Attorney’s Office December 11, 2012|
DENVER—Gregory William Bell, age 54, of Weld County, Colorado, was charged last week by information with making false bank entries, misapplication, bank fraud, and money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, and the FDIC-Office of the Inspector General announced. Bell made his first court appearance on December 5, 2012, where he waived his right to indictment and was advised of the charges pending against him. He was then released on a personal recognizance bond.
The federal prosecutor handling the Bell case then filed a notice of disposition, which notifies the court that an agreement has been reached between the prosecution and the defense regarding a guilty plea. The change of plea hearing will take place on February 5, 2013, at 9:00 a.m. before U.S. District Judge Lewis T. Babcock. The details of the plea agreement will not be made available until the change of plea hearing.
According to the facts contained in the information, Gregory Bell was an officer of New Frontier Bank, which was insured by the Federal Deposit Insurance Corporation. On October 26, 2005, Bell made a false entry in a bank book, report, or statement with intent to defraud the bank and deceive one or more of the bank’s officers. Specifically, the defendant allegedly prepared a form entitled “Credit Presentation and Committee Approval” for a $5,583,500 loan to two individuals on which he failed to disclose that a certificate of deposit, the value of which was $106,759, which the two individuals pledged as collateral, in fact belonged to another individual and that Bell would benefit personally as a result of the loan. On March 14, 2008, Bell willfully misapplied approximately $662,045.79 of New Frontier’s funds.
On June 17, 2008, and continuing until September 9, 2008, Bell devised and participated in a scheme to defraud the bank and to obtain money owned by and under the custody and control of the bank by means of materially false and fraudulent pretenses. As part of the scheme, Bell, knowing that state and federal regulators had directed New Frontier Bank to raise capital, arranged for eight bank customers to borrow money from the bank and use the proceeds of those loans to purchase shares of bank stock so New Frontier could inject some of the money paid for the stock into the bank. As part of the scheme, Bell prepared and caused others to prepare bank forms titled “Credit Presentation and Committee Approval” for the eight loans described above. Bell failed to disclose on the credit presentation forms that proceeds of the loans would be used to purchase shares of stock in New Frontier Bancorp.
Bell also allegedly caused false and misleading statements to be included on the credit presentation forms. He the presented the credit presentation forms to bank loan committees and caused other persons to present them to bank loan committees. As part of the scheme, Bell caused the bank to loan approximately $20,145,979.23 to the eight borrowers mentioned above, and caused those borrowers to use approximately $4,310,215 of those proceeds to purchase shares of stock in the bank. On August 29, 2008, Bell executed a scheme by causing the bank to transfer approximately $260,000 of the proceeds of one of the bank loans to an account of the borrower of that loan.
On June 27, 2008, Bell conducted a financial transaction affecting interstate commerce. Specifically, he deposited a check in the amount of $160,000 into his account at the bank. The transaction involved the proceeds of a specified unlawful activity, knowing that the transaction was designed in whole or in part to conceal and disguise the source and the ownership of the proceeds of the unlawful activity.
Finally, the information includes an asset forfeiture allegation, which states that Bell shall forfeit any real or personal property that was involved in the offenses or any property constituting or derived from the proceeds obtained from the offenses and any property traceable to any property involved in said offenses.
Bell faces one count of false bank entries, one count of misapplication, and one bank fraud. Each of those counts carry a penalty of not more than 30 years in federal prison and a fine of up to $1,000,000. He also faces one count of money laundering. If convicted of money laundering Bell faces not more than 20 years in federal prison and a fine of up to $500,000 or twice the value of the property involved in the transaction, whichever is greater.
“Bank officers bear a particular responsibility to their bank, its customers, and the public not to engage in fraud,” said U.S. Attorney John Walsh. “When they do, they will be held accountable.”
“The FBI will continue to aggressively investigate bank officers and directors when their criminal actions contribute to the failure of financial institutions,” said FBI Denver Special Agent in Charge James Yacone. “These failures can have a significant impact on the stability of our banking system, and it is the FBI’s duty to investigate bank personnel who violate their fiduciary obligations to the institution and depositors.”
“The Federal Deposit Insurance Corporation (FDIC) Office of the Inspector General is pleased to join our law enforcement colleagues in announcing the charges against Mr. Bell for his activities as an officer at the failed New Frontier Bank,” said Jon Rymer, Inspector General of the Federal Deposit Insurance Corporation. “It is especially important to investigate and prosecute cases where trusted insiders abuse their positions to cause harm to the institution and undermine the integrity of the financial services industry as a whole. We are committed to preventing and addressing such threats to the safety and soundness of FDIC-Insured banks throughout the country.”
“Bank fraud can take time to unravel and IRS-CI stands ready to partner with our law enforcement agencies to combat these crimes,” said Lilia Ruiz, Acting Special Agent in Charge, IRS-Criminal Investigation, Denver Field Office.
This case was investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service-Criminal Investigations (IRS-CI), and the Federal Deposit Insurance Corporation-Office of the Inspector General (FDIC-OIG).
An Information is a charging document where the defendant waived the Constitutional right to be indicted by a federal grand jury.
The charges in the information are allegations, and the defendant is presumed innocent unless and until proven guilty.