May 24 (Bloomberg) -- The former chief executive officer of Virginia’s Bank of the Commonwealth was convicted in a fraud scheme that federal investigators said led to one of the biggest bank failures in the state’s history.
Edward Woodard, 70, who ran the bank for more than three decades, was found guilty today by a federal jury in Norfolk, Virginia, of 11 counts including conspiracy, bank fraud and making false statements. Woodard, who is scheduled to be sentenced on Sept. 26, faces a maximum penalty of 30 years in prison on each count.
Two other former bank executives and a borrower were also convicted today of related charges.
“The brazen greed and dishonesty of these four defendants toppled one of Virginia’s largest financial institutions and intensified the impact of the 2008 financial crisis,” U.S. Attorney Neil H. MacBride of Alexandria, Virginia, said in an e-mailed statement.
The executives concealed funding shortfalls by overdrawing demand deposit accounts to make loan payments and extending new loans or additional principal on existing loans to cover payment deficiencies, the U.S. said in the indictment.
From 2008 until it closed in September 2011, the Norfolk-based bank lost almost $115 million, according to the indictment.
The 21-branch bank had $902 million in deposits acquired by Southern Bank & Trust Co. of Mount Olive, North Carolina. The bank was one of 92 to fail in 2011, and it was estimated to cost the Federal Deposit Insurance Corp.’s fund $268 million.
“We plan to challenge the verdicts and seek an appeal as well,” Andrew Sacks, a lawyer for Woodard, said in an e-mail.
The case is U.S. v. Woodard, 12-cr-00105, U.S. District Court, Eastern District of Virginia (Norfolk).
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