A former bank executive faces two years in prison and a $2.4 million restitution payment after pleading guilty to one count of misapplication of bank funds for his involvement in a real estate investor’s scheme that ultimately forced the institution he headed, Oakland Deposit Bank, into receivership.
According to information revealed during his plea hearing, former Oakland Deposit Bank president and CEO Stephen Henry of Memphis helped local real estate investor Stephen Sims use money from construction loans to pay unrelated unsecured loans, many of which were delinquent, in late 2007.
The plea hearing information also shows Henry manipulated the bank’s books and records to allow bank money to pay on delinquent loans without being credited to a customer’s account.
“The court found that while he did not personally benefit from the fraud perpetrated against the bank, Henry’s failure to follow proper banking procedure enabled the scheme to defraud the bank,” said U.S. attorney Edward L. Stanton III in a press release.
Stanton said Henry’s sentencing this week “serves as a warning to those in positions of authority that the failure to exercise due diligence can leave you exposed to serious criminal consequences.”
Subsequently, Sims defaulted on over $2.4 million in loans from the bank, which had been owned by Henry’s family. This forced the institution into
Sims was sentenced to more than seven years in prison and to pay more than $2.4 million in restitution last July after pleading guilty to three counts of bank fraud.
