Former Bank President Indicted in Multimillion-Dollar Fraud Conspiracy

Two former top FirstCity Bank officers, one of them from Canton, fleeced millions from their own financial institution, authorities said today.

Bank president Mark A. Conner, formerly of Canton, and vice president Clayton A. Coe, of McDonough, allegedly duped colleagues into approving multiple multimillion-dollar commercial loans to borrowers who were actually purchasing personal property owned by the executives, according to an indictment unsealed Monday afternoon.

The bank's loan committee and board of directors didn't know that the men owned the property.

Between February 2006 and February 2008, the scheme yielded more than $5 million for Conner and his conspirators, federal authorities say.

According to Patrick Crosby, spokesman for U.S. Attorney Sally Quillian Yates, this is what prosecutors believe happened:

Conner, Coe and their conspirators "misrepresented the essential nature, terms, and underlying purpose of the loans and falsified documents and information presented to the loan committee and the board of directors."

Those alleged actions "caused at least 10 other federally-insured banks to invest in, or 'participate in' the fraudulent loans based on these and other fraudulent misrepresentations, shifting all or part of the risk of default to the other banks.  Coe’s bonus compensation was tied to the origination of FirstCity Bank loans, including the fraudulent loans with which he and Conner allegedly assisted each other."

To hide their scheme, the men routinely misled federal and state bank regulators and examiners.

"They also unsuccessfully sought federal government assistance through the U.S. Treasury Department’s Troubled Asset Relief Program and engaged in other misconduct in an attempt to avoid seizure by regulators and prevent the discovery of their fraud," Crosby said in a news release.

State and federal authorities seized the bank March 20, 2009.

Conner and Coe, both 44, have been charged with bank fraud and conspiracy to commit bank fraud. Conner faces an additional charge of conducting a continuing financial crimes enterprise, which carries a mandatory minimum sentence of 10 years in federal prison, a maximum sentence of life in prison and fines up to $10 million.

The conspiracy and bank fraud charges against Conner and Coe carry a maximum sentence of 30 years in prison and a potential fine of $1 million on each count.

Upon his return from Turks and Caicos, Conner was taken into custody by federal agents at Miami International Airport on Sunday morning–the second anniversary of FirstCity Bank’s failure. He appeared before a federal magistrate judge in Miami today. Pending his transfer to Atlanta for trial, he will be detained there as a flight risk. 

A formal detention hearing will take place in Miami at 1:30 p.m. Thursday.

Coe's first appearance in the Northern District of Georgia has not been scheduled.

Assistant U.S. Attorneys Douglas W. Gilfillan and David M. Chaiken are prosecuting the case, which is being investigated by a number of agencies from the FBI to the IRS.

OFFICIALS RESPOND TO INDICTMENT

"The entire country has felt the deep economic impact of failed banks," United States Attorney Sally Quillian Yates said. "At the heart of this indictment is an abuse of power by key insiders, who are charged with tricking their own colleagues into approving millions of dollars in commercial loans to fund the defendants' own personal business activities, and to enrich themselves at the bank's expense. Along the way, these defendants also allegedly defrauded state and federal bank regulators and examiners, and at least 10 other federally-insured banks in Florida and Georgia that invested in the fraudulent multi-million dollar loans."

"The Federal Deposit Insurance Corporation (FDIC) Office of Inspector General (OIG) is pleased to join the United States Attorney's Office for the Northern District of Georgia and our law enforcement colleagues in announcing this Indictment," FDIC Inspector General Jon Rymer said. "We are particularly concerned when former senior bank officials, who have held positions of trust within their institutions, are alleged to have been involved in criminal activity. We will continue to aggressively pursue bank officials and others who victimize financial institutions."

"Today's indictment marks yet another occasion where bank executives are alleged to have turned to criminal fraud in the midst of the financial crisis, including an attempt to obtain millions of dollars from the American taxpayer through the Troubled Asset Relief Program," said Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program. "SIGTARP will continue to work with our law enforcement partners to bring those who engage in such crimes to justice.”

“Honest and law abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money," IRS-Criminal Investigation Special Agent in Charge Reginael McDaniel said. "Those individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable."