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Bank CEO Sentenced to Prison
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U.S. Department of Justice
United States Attorney
Eastern District of Pennsylvania
615 Chestnut Street
Philadelphia, PA 19106-4476
November 14, 2016
Bank CEO Sentenced to Prison
Brian Hartline, 52, of Collegeville, PA, was sentenced today by U.S. District Court Judge C. Darnell Jones, II, to a term of imprisonment of 14 months and fined $50,000 for his role in a fraud conspiracy to obtain $13.5 million in public funds for NOVA Bank. On April 27, 2016, Hartline and co-defendant Barry Bekkedam were found guilty of conspiracy to defraud the United States, TARP fraud, and two counts of false statements to the federal government. Hartline had served as President and Chief Executive Officer of NOVA Bank and co-defendant Bekkedam had served as Board Chairman. Their scheme involved the Troubled Asset Relief Program (TARP) and was devised to defraud the government of more than $13 million.
Bekkedam and Hartline, with others, formed NOVA Bank in 2002. Bekkedam also owned and operated a financial advisory company, Ballamor Capital Management, and advised Ballamor clients to invest in NOVA. But in 2008, NOVA faced risk of failure because of bad loans and investments. In October 2008, NOVA Financial Holdings, Inc., of Berwyn, Penn., the parent company of NOVA Bank, applied for approximately $13.5 million through the U.S. Department of the Treasury Troubled Asset Relief Program. In June 2009, NOVA Bank was approved to receive the TARP funds on the condition that the bank raised $15 million in additional, private capital.
Bekkedam and Hartline devised a scheme to make NOVA bank appear more financially sound than it was – that new money was being invested in the bank. As part of the scheme, the defendants arranged for NOVA Bank to loan money to three individuals to transfer to NOVA's parent company so it would appear as though the bank had new capital from an outside investor. In fact, the "new money" investment was the bank's own money.
The bank ultimately did not receive TARP funds, and in October 2012, the bank failed and was closed by state and federal banking regulators.
The case was investigated by the Federal Bureau of Investigation, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Internal Revenue Service Criminal Investigations, the Federal Deposit Insurance Corporation Office of Inspector General, the Office of Inspector General of the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau. This case was prosecuted by Assistant United States Attorney David J. Ignall.
UNITED STATES ATTORNEY'S OFFICE
EASTERN DISTRICT PENNSYLVANIA
Suite 1250, 615 Chestnut Street
Philadelphia, PA 19106