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The following are highlights of our work during the April 1, 2020–September 30, 2020, semiannual reporting period. Closed investigative reports are not made public and are subject to disclosure in accordance with applicable law. However, significant investigative results and other investigative statistics are reported in our semiannual report to Congress, as required by statute.
Three First NBC Executives and One Individual Indicted, Three Others Pleaded Guilty, in Fraud Against Failed $5 Billion Bank
The former president, chief credit officer, and executive vice president of First NBC Bank—the $5 billion bank that failed in April 2017—were indicted for an alleged fraud scheme totaling hundreds of millions of dollars and involving at least seven coconspirators. Three of those coconspirators pleaded guilty in recent months to fraud conspiracy charges and face up to 5–30 years in prison, another was indicted along with the executives, and the remaining three pleaded guilty to fraud conspiracy charges in 2018 and 2019.
Five Individuals Charged in Paycheck Protection Program Fraud Cases Attempting $46 Million in Forgivable Loans
In four separate cases, five individuals were charged for allegedly filing fraudulent applications seeking a combined $46 million in forgivable loans guaranteed by the U.S. Small Business Administration (SBA) through the Coronavirus Aid, Relief, and Economic Security (CARES) Act Paycheck Protection Program (PPP). The individuals sought loans for companies they owned or worked for by falsifying application information, such as payroll expenses and tax information. To date, the government has recovered about $4 million of the $7.5 million the defendants received.
Former Whitaker Bank President Pleaded Guilty to Embezzlement
The former president of Whitaker Bank in Kentucky pleaded guilty to embezzling or misapplying more than $50,000 of the bank’s funds. He was also charged by way of information, waiving his right to indictment by a federal grand jury.
Former Crown Bank Executive Pleaded Guilty to Bank Fraud
The former chief executive officer (CEO) of Crown Bank in Minnesota pleaded guilty to one count of wire fraud and one count of filing a false income tax return. From 2012 to 2017, he made false entries to conduct transactions for his own benefit without notifying the bank’s board of directors and without properly notifying the appropriate state and federal regulatory agencies. He also filed false tax returns failing to disclose his embezzled earnings, resulting in a tax loss of about $285,200.
Former SmartBank Vice President Sentenced for Embezzlement Scheme
The former vice president of loan operations for SmartBank, a state member bank, was sentenced to 15 months in prison, 4 years’ supervised release, and $516,630 in restitution in a plea agreement after being charged with one count of embezzlement and one count of filing a false tax return. From about 2013 to 2018, she manipulated SmartBank’s general ledger to fund the issuance of 60 cashier’s checks totaling nearly $360,000 for her own benefit and failed to report the embezzled funds as income on her tax returns.