Anthony J. Atkins, former president of GulfSouth Private Bank, was sentenced to 63 months in prison and ordered to pay more than $2.4 million in restitution for conspiracy to commit bank fraud, four counts of false statements to a federally insured institution, bank fraud and mail fraud, according to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
According to SIGTARP, Atkins – whose bank received $7.5 million in Troubled Asset Relief Program (TARP) funds – concocted a scheme to conceal bad debt on mortgage loans. Prosecutors said that in 2007, Atkins was notified that a company that had been loaned $3.4 million by GulfSouth was no longer able to make payment on the mortgage loans, which had been secured by three condominiums. To conceal the debt, Atkins and GulfSouth VP Samuel D. Cobb solicited four people to take out new loans with the bank to purchase the three condos. Atkins and Cobb told the four men that the loans would be non-recourse – meaning that if the loans defaulted, GulfSouth would have no recourse against them.
Atkins and Cobb got mortgage loans and additional lines of credit in the amount of about $3.8 million issued to the four men. According to the terms of these fraudulent loans, the straw buyers weren’t required to make any payments until the loans came due. The new loans were then used to pay off the old mortgages that were going into default, according to SIGTARP.
Issuing those new loans and lines of credit created the appearance that the old debt was performing. That let Atkins avoid reporting the loans associated with the condos as bad debt. Despite the bank officers’ legerdemain – and a $7.5-million cash infusion from the federal government – the bank went on to fail.
“Taxpayers lost $7.5 million in TARP dollars invested in GulfSouth Private Bank – a bank that failed after being led by the top two officers committing bank fraud,” said SIGTARP Christy Goldsmith Romero. “Bank president Tony Atkins brought in friends and family as co-conspirators in this conspiracy to make troubled loans appear current. Each of those co-conspirators has been convicted.”
Failed Florida bank officers accused in $7.5 million fraud
Premier Bank board members convicted in $6.8 million fraud
The former president of a failed bank has been sentenced to more than five years in prison for a scheme that included covering up defaulted mortgage loans.