Two former executives of Bank of Granite Corp. agreed to pay penalties to the federal government Wednesday over accusations that they made false statements in bank records.
The defendants, former chief executive Charles Snipes and former vice president Gary Prewitt, did not admit wrongdoing. The bank, based in Granite Falls, was not involved in the settlement.
The penalties announced by the U.S. attorney for the Western District of North Carolina stem from an investigation by the Federal Deposit Insurance Corp., the FBI and the Secret Service about loans issued for the benefit of a client referred to in court documents as “Customer A.”
Essentially, the government alleged the bank issued a series of loans backed by third parties that actually were for the benefit of Customer A. The bankers got in trouble for not disclosing this in bank records and FDIC reports, as required by law, according to the complaint.
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In a statement, Gretchen Shappert, U.S. attorney for the Western District of North Carolina, said laws requiring “truthful and accurate disclosures in banking transactions” are needed to “protect the integrity and stability of our banking institutions and our entire financial system.”
Snipes has agreed to a $200,000 penalty; Prewitt, $25,000. Both agreed that they will not work for Bank of Granite or any other bank insured by the FDIC, without written consent from the FDIC.
Snipes, 75, retired earlier this year. Prewitt retired in 2006, according to court filings. Both declined to comment. Bank of Granite also declined to comment.
According to court documents, the loans were made to Customer A from about 1995 to 2006. Customer A was frequently overdrawn or behind in loan payments.
Among the specific accusations, the government alleges that in 1999, Prewitt recorded a $14,750 loan for Customer B as a business expense, when part of it was actually meant to benefit Customer A.
The government also alleges that, in 2002, Snipes failed to tell the FDIC that payment on one of Customer A's loans was made through the bank issuing a new loan to a Customer C. Snipes “falsely stated that this loan had been substantially ‘paid' when in reality more money had been borrowed to replace the older loan,” the court filing says.
The proposed judgment needs approval from a U.S. District Court judge.