Former Skagit County Bank CEO Sentenced to Three Years in Prison for Falsifying Regulatory Documents
False Reports an Attempted to Hide Worsening Financial Condition
|U.S. Attorney’s Office November 15, 2013|
The former Chairman and CEO of Summit Bank, a Skagit County community bank, was sentenced today in U.S. District Court in Seattle to three years in prison and two years of supervised release for making a false entry in a report of an insured bank, announced U.S. Attorney Jenny A. Durkan. James E. Bishop, 70, of Mount Vernon, Washington, pleaded guilty August 21, 2013. In his plea agreement, Bishop admits that between 2009 and 2011, Bishop and his son, who was the bank president, concealed from regulators the mounting number of loans that were in default. Summit bank was ultimately closed by state regulators and sold in May 2011. At sentencing, Chief U.S. District Judge Marsha J. Pechman noted the length of the scheme, the number of accounts manipulated, and the control Bishop exerted over employees to stop them from notifying regulators. “This conduct hurts communities greatly,” Chief Judge Pechman said.
“This defendant falsified reports to save ‘his’ bank and his fortune,” said U.S. Attorney Jenny A. Durkan. “Rather than be up front with the regulators about the condition of the bank, the defendant and his son initiated a high-stakes shell game to deceive the FDIC. Through his actions he shifted the risk for losses to the FDIC and consequently to the public.”
According to the records filed in the case, in 2005 James E. Bishop became CEO of Summit Bank and chairman of Summit Bank’s Board of Directors. His son, James E. Bishop, II, served as president of the bank, and both were significant shareholders in the bank. James E. Bishop, II has also been charged in the case. The younger Bishop served as president of Summit Bank from 2005-2011. According to the statement of facts in the plea agreement, the bank was required to file various reports with the Federal Deposit Insurance Corporation (FDIC) disclosing the loans the bank had made and the status of the loans. In his plea agreement, Bishop admits that between 2009 and 2011, he caused the bank to undertake financial transactions related to past due loans, which concealed the overdue loans in the quarterly reports that went to the FDIC, essentially hiding millions of dollars in loans that were past due and causing the bank to appear financially healthier than it actually was. For example, in one report on June 30, 2010, the bank reported past due loans of approximately $6 million in outstanding loans, payments on which were past due for 30 or more days. In truth, the bank had at least $13 million in outstanding loans, payments on which were past due for 30 or more days.
“The FBI values its partnership with the FDIC-Office of Inspector General because the complexity of a fraud like this requires tremendous time and expertise,” said Special Agent in Charge Laura M. Laughlin of the FBI Seattle Office. “Collaboration between our offices brought specialized resources to bear and the USAO commendably used the uncovered information to bring a significant schemer to justice.”
“Today, Mr. Bishop is being held accountable for deceiving regulators and seeking to undermine the integrity of the FDIC’s examination process,” said Fred W. Gibson, Jr., Acting Inspector General for the Federal Deposit Insurance Corporation. “In addition to his prison sentence, it is fitting that he will be banned from participating in the affairs of any federally insured financial institution going forward. We appreciate the U.S. Attorney’s Office’s efforts in bringing this matter to a successful conclusion and achieving results that should deter others from similar criminal activity.”
As part of a civil enforcement agreement entered with the FDIC, Bishop will pay $300,000 to the FDIC.
James E. Bishop, II is scheduled for sentencing on December 6, 2013.
The case was investigated by the FDIC Office of Inspector General (FDIC-OIG) and the FBI. The case was prosecuted by Assistant United States Attorney Matthew Diggs.
Press contact for the U.S. Attorney’s Office is Emily Langlie at (206) 553-4110 or Emily.Langlie@usdoj.gov.