Stephen Fields, a former executive vice president and senior commercial loan officer for the now-defunct Bank of the Commonwealth, was sentenced for conspiracy to commit bank fraud, false entries in bank records, misapplication of bank funds and false statements to a financial institution.
As part of his sentencing, Fields was ordered to pay more than $331 million in restitution to the Federal Deposit Insurance Corp. and to forfeit $61 million in proceeds that resulted from the scam.
Evidence presented during the ten-week trial that ended in May established that Fields engaged in an illegal reciprocal relationship with troubled borrowers to hide the bank’s deteriorating financial condition.
For example, three conspirators—Thomas Arney, Eric Menden and George Hranowskyj—all testified in court that they were told by Fields to perform favors like buying Bank of the Currituck stock, bailing out the bank’s president’s son on bad investments, and purchasing bank-owned property with fully funded Bank of the Commonwealth loans. In return for these actions, the three conspirators received preferential treatment such as affording large overdrafts (sometimes for hundreds of thousands of dollars), below-market interest rates, easy access to credit, and loans to make interest payments on other loans.
Despite knowledge that the conspirators had serious financial problems, including Hranowskyj accusing Menden of embezzling money from one of the bank’s largest construction loans, Fields continued to lend them millions of dollars.
Another part of Fields’ scheme included the removal of hundreds past-due loans from bank reports prepared for the bank’s board of directors in order to make payments on wholly unrelated loans. According to the Department of Justice, Fields was “well aware that such loans should appear on the bank’s past due loan report,” but he disguised this past dues status to cover the Bank’s diminishing financial condition.
Throughout this conspiracy, Fields received substantial personal benefits from the bank in the form of a large salary and a company car. Additionally, Menden and Hranowskyj paid over $6,000 to install granite countertops and other amenities in Field’s kitchen.
Field’s crimes were a significant factor why the Bank of the Commonwealth failed and closed in September 2011. As a result of this failure, the FDIC has sustained at least $333 million in losses.
“As a former bank examiner, Fields should have stopped and blown the whistle, but instead, he engaged in an extend and pretend scheme to mask past-due loans, rigged auctions to get foreclosed property off of the bank’s books, and lied to bank examiners,” said Christy Romero, special inspector general for the Troubled Asset Relief Program. “The culture among senior executives at TARP applicant Bank of the Commonwealth was rotten at its core, and Fields was a principal contributor to the stench of corruption and entitlement at the bank.”