Former Bank President Indicted for Bank Fraud
Bank Closed, FDIC Paid $4.3 Million in Losses
|U.S. Attorney’s Office December 01, 2009|
KANSAS CITY, MO—Matt J. Whitworth, United States Attorney for the Western District of Missouri, announced that the former president of Hume Bank in Bates County, Mo., was indicted by a federal grand jury today for bank fraud.
Jeffrey W. Thompson, 39, of Hume, Mo., was charged in a 13-count indictment returned by a federal grand jury in Kansas City.
Thompson became president of Hume Bank in 2001. According to today’s indictment, Thompson engaged in a scheme to defraud Hume Bank from Jan. 1, 2004, through Aug. 31, 2007, when he left the bank. Thompson allegedly presented false statements and reports to both the bank’s board of directors and the FDIC. These false reports, the indictment says, concealed problem loans from state and federal bank examiners and from the board. Thompson also abused the bank’s credit card for personal expenditures without board approval, the indictment alleges.
As a result of Thompson’s misconduct, the indictment says, the bank incurred large loan losses. For example, the bank incurred a loss of $234,000 on a loan to Rick Laning, the uncle of Thompson’s wife. Due primarily to losses on loans originated and administered by Thompson, Hume Bank became insolvent and was closed by the Missouri Division of Finance on March 7, 2008. In order to meet obligations to depositors, the FDIC insurance fund sustained a loss of $4,324,463.
According to today’s indictment, Thompson masked past due loans by altering loan maintenance records. Thompson allegedly presented false loan maintenance reports, which included past due principal balances and past due interest falsely reduced to zero as well as false maturity dates. During the bank fraud scheme, the indictment says, past due principal was reduced to zero in 1,584 instances, past due interest was reduced to zero on 1,460 occasions, and 1,445 maturity dates were changed on the loan maintenance reports. The great majority of these changes were not supported by loan modification agreements in bank files.
For example, Thompson allegedly made a false entry in the books in regard to six loans to Brad Laning, his wife’s cousin, by changing the past due principal to zero on 16 occasions, when in fact, all six loans had past-due principal. In another instance, Thompson allegedly made a false entry in the books in regard to a loan to Rick Laning, his wife’s uncle, by stating that past due interest was zero and past due principal was zero, when in fact the past due interest was $3,672 and the past due principal was $55,510. Thompson also allegedly made a false entry in the books in regard to a loan to Kay Thompson, his mother, by stating that the past due interest was zero and the past due principal was zero, when in fact the past due interest was $246 and the past due principal was $3,500.
Today’s indictment also alleges that Thompson completed false Officer’s Questionnaires to the FDIC by falsely stating that the bank had no accommodation loans, or nominee loans, and by falsely stating that the bank had no instances of capitalized interest. In fact, Thompson had made accommodation, or nominee loans, to relatives from which he personally profited, and had made loans which capitalized interest.
According to the indictment, Thompson concealed loans and overdrafts from the bank’s board of directors. Thompson concealed from the board loans he made to cover unposted overdrafts, and concealed from the board loans he made to capitalize interest. As part of the fraud scheme, the indictment alleges, Thompson significantly lowered interest rates on loans without board approval or written loan modification agreements in the bank files. Thompson allegedly instructed customers to sign blank inspections, financial statements, and deeds of trust, and told the customers that he would complete the forms later.
Thompson allegedly misrepresented to the board the loan purpose on problem borrowers. For example, Thompson made a loan in the amount of $14,500 to Davie Klinksick, his father-in-law, listing the purpose of the loan as “farm equipment.” Thompson instead deposited $9,000 of the proceeds from that loan into a joint account held by him and his wife, the indictment alleges, and on the same day wrote a check from that account in the amount of $9,000 to Fugate Motors RVs.
Thompson is charged with one count of bank fraud, three counts of misapplication of bank funds, six counts of false bank entries, reports and transactions, and three counts of making false statements to the FDIC.
Today’s indictment also contains a forfeiture allegation, which would require Thompson to forfeit to the government $300,000, which represents the proceeds of the fraud scheme, or his residential property.
Whitworth cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Kate Mahoney. It was investigated by the FDIC and the FBI.