11 Superior Bank bosses charged with fraud
14 January 2016 Washington DC
Image: Shutterstock
The US Securities and Exchange Commission has charged 11 former executives and board members at Superior Bank and its holding company, with fraud.
The 11 are accused of being involved in various schemes to conceal the extent of the bank’s loan losses in the wake on the financial crisis.
According to the SEC’s allegations, the fraud involved some of the largest loans in the bank’s portfolio. High-ranking officers and directors are accused of deliberately misleading investors and regulators by ‘propping up’ the bank through straw borrowers, insider deals and false appraisals.
Schemes allegedly included using appraisals that were several years out of date, overstating the value of loan properties and presenting inaccurate or unviable projected future uses of loan properties.
The SEC draws specific attention to the extension and renewals of bad loans in order to avoid impairment, and to avoid reporting allowances for loan and lease losses in its financial accounts.
The commission alleges that Superior Bank overstated its income in public filings by as much as 99 percent in 2009, and by 50 percent in 2010, before it collapsed in 2011.
Andrew Ceresney, director of the SEC’s enforcement division, said: “Accurate and fair reporting of loan impairment is of paramount importance for financial institutions during periods of severe financial stress.”
He added: “Superior’s senior-most officers and certain directors allegedly engaged in a widespread and egregious accounting fraud by concealing significant losses from loan impairments.”
Walter Jospin, director of the SEC’s Atlanta regional office, added: “We allege that pervasive fraudulent behaviour rippled through the executive offices at Superior Bank in a calculated effort to mislead investors on the amount of loan losses and disguise the bank’s flailing financial condition.”
Nine of the 11 former officers and executives have agreed settlements with the SEC under which they neither confirm nor deny the charges. They are all permanently barred from serving as officers or directors of a public company.
Among these are former CEO and chairman of Superior Bank’s holding company, Superior Bancorp, Charles Bailey, who will pay a penalty of $250,000. Other penalties range from $100,000 to $200,000.
Superior Bank’s former CEO, Charles Scott, chief credit officer, John Figlewski, and president, George Hall, have agreed to bifurcated settlements, and the court will determine specific financial penalties at a later date.
Two of the charged, Kenneth Pomeroy and William McKinnon are contesting the complaint. Pomeroy was president of Superior Bank’s central Florida region and McKinnon was senior vice president and commercial loan officer. Both are contesting the SEC complaint filed in the federal district court in Tallahassee.
The 11 are accused of being involved in various schemes to conceal the extent of the bank’s loan losses in the wake on the financial crisis.
According to the SEC’s allegations, the fraud involved some of the largest loans in the bank’s portfolio. High-ranking officers and directors are accused of deliberately misleading investors and regulators by ‘propping up’ the bank through straw borrowers, insider deals and false appraisals.
Schemes allegedly included using appraisals that were several years out of date, overstating the value of loan properties and presenting inaccurate or unviable projected future uses of loan properties.
The SEC draws specific attention to the extension and renewals of bad loans in order to avoid impairment, and to avoid reporting allowances for loan and lease losses in its financial accounts.
The commission alleges that Superior Bank overstated its income in public filings by as much as 99 percent in 2009, and by 50 percent in 2010, before it collapsed in 2011.
Andrew Ceresney, director of the SEC’s enforcement division, said: “Accurate and fair reporting of loan impairment is of paramount importance for financial institutions during periods of severe financial stress.”
He added: “Superior’s senior-most officers and certain directors allegedly engaged in a widespread and egregious accounting fraud by concealing significant losses from loan impairments.”
Walter Jospin, director of the SEC’s Atlanta regional office, added: “We allege that pervasive fraudulent behaviour rippled through the executive offices at Superior Bank in a calculated effort to mislead investors on the amount of loan losses and disguise the bank’s flailing financial condition.”
Nine of the 11 former officers and executives have agreed settlements with the SEC under which they neither confirm nor deny the charges. They are all permanently barred from serving as officers or directors of a public company.
Among these are former CEO and chairman of Superior Bank’s holding company, Superior Bancorp, Charles Bailey, who will pay a penalty of $250,000. Other penalties range from $100,000 to $200,000.
Superior Bank’s former CEO, Charles Scott, chief credit officer, John Figlewski, and president, George Hall, have agreed to bifurcated settlements, and the court will determine specific financial penalties at a later date.
Two of the charged, Kenneth Pomeroy and William McKinnon are contesting the complaint. Pomeroy was president of Superior Bank’s central Florida region and McKinnon was senior vice president and commercial loan officer. Both are contesting the SEC complaint filed in the federal district court in Tallahassee.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
