A former manager of a bank that received millions in Troubled Asset Relief Program funds has been found guilty of bank fraud, TARP’s Special Inspector General announced Friday.
From 2007 to 2009, Phillip Owen approved and recommended over $200,000 in fraudulent loans while branch manager for Superior Financial Services, a bank in Attalla, Alabama. Despite the $69 million federal bailout Superior and its parent company, Superior Bancorp, received in 2008, the entire operation failed by 2011.
“Owen overvalued vehicles that were the subject of loan applications, disbursed loan proceeds to individuals not entitled to such disbursements or involved in the loan transaction, and prematurely released collateral used to secure loans,” the announcement explained. “Owen approved the loans, certified that he had verified the loan applicants’ information knowing he had not done so, and recommended that other loans be approved. In exchange for approving the fraudulent loans, Owen was occasionally compensated with narcotics.”
“Owen, while a bank manager for Superior Financial Services, a bank that had been bailed out by taxpayers through TARP and which later failed, paid for his narcotics using bank dollars,” said Christy Romero, Special Inspector General for TARP. “In exchange for his narcotics, Owen approved bank loans knowing that customers had falsified the loan applications, and he often inflated the loans beyond the value of the underlying collateral. Owen’s fraud caused the bank to suffer more than $217,000 in bank losses.”
Owen pleaded guilty to one count of conspiracy to commit bank fraud back in March, and last week was sentenced to a whopping six months in federal prison for his crimes, “followed by six months of community confinement as a special condition of five years of supervised release.” He also has to pay back the $217,540 in bad loans his bank had to write off as a result of his actions.
The announcement did not specify what kind of drugs Owen received in exchange for the hundreds of thousands of dollars in fraudulent loans.
“TARP was designed to stabilize banks and our financial system during a time of crisis, not to finance crime,” Romero said. “SIGTARP and our law enforcement partners will track down those guilty of exploiting taxpayers’ TARP investments and ensure that justice is served for their crimes.”
Superior Bancorp has repaid none of the $69 million in taxpayer funds it received, and is one of 30 institutions that went bankrupt despite receiving millions in TARP bailout money. According to the most recent Treasury Department “Citizen’s Report” on TARP, as of September of last year over $3 billion in “banking program investments” remained unpaid.