From White Collar Crime Fighter: Why would the founder of a successful financial institution steal from it – risking all?

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The former CEO of the First National Bank of Northern Kentucky was indicted in connection with a $4.5 million fraudulent loan scheme that he allegedly facilitated. Richard Thomas, who founded the bank in 1992, was charged with conspiracy to commit bank fraud and aiding and abetting the submission of false loan applications.

Details: According to court documents, one of Thomas’s longtime bank customers introduced him to John and Linda Van Winkle and Thomas subsequently began acting as their personal banker and the banker for their two businesses. Those “businesses,” Design Services and Koolsuit Inc., held patents for air-cooled bullet-proof vests and race-car driver suits. The patents, the value of which was undetermined, were nonetheless used to secure several of the 19 fraudulent loans made to the Van Winkles as well as to Ms. Van Winkle’s two daughters, one of whom was a fulltime law school student at the time.

The allegedly fraudulent loans and loan renewals were made between March 2000 and August 2002 when Thomas was ousted by the bank’s board under pressure from federal bank regulators.

The indictments against Thomas and against the Van Winkles and their daughters allege that Thomas conspired with the Van Winkle family members to fraudulently obtain multiple loans and loan renewals from the bank by falsely stating on loan applications that the funds were for business purposes, when in fact they were used to purchases cars, homes and to fund other personal expenses.

Thomas, the Van Winkle family, along with the boyfriend of one of the Van Winkle daughters were indicted on one count of conspiracy to commit bank fraud, bank fraud and 11 counts of making false loan applications.

Important: The case against all the defendants began with a routine visit to the bank in 2002 from the federal Office of the Comptroller of the Currency, which regulates banks with a national charter.

The agency found an unusually large number of loans in default and ordered the bank to terminate Thomas. Thomas agreed to retire as president and CEO in September of that year.

The bank wrote off $10.7 million worth of bad loans in 2002, and in 2003 was sued by shareholders seeking $14 million. In December 2003, the bank changed its name to First Bank of Northern Kentucky, after it switched from a national to a state charter.

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