Former Louisiana Bank Executive Pleads Guilty To Fraud Conspiracy

Posted by Orb Staff on April 30, 2012 No Comments
Categories : Residential Mortgage

11434_crime Former Louisiana Bank Executive Pleads Guilty To Fraud Conspiracy The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and U.S. Attorney for the Eastern District of Louisiana have announced that Reginald R. Harper, former president and CEO of First Community Bank of Hammond, La., pleaded guilty to one count of conspiracy to commit bank fraud.

According to court documents, Harper loaned in excess of $2 million to co-defendant Troy Fouquet, a real estate developer, or to one of a number of companies owned or controlled by Fouquet in 2004. The purpose of the loans was to purchase parcels of real estate, develop them into subdivisions, and build houses on them, which were to be eventually bought by prospective home buyers who would obtain permanent mortgages to finance the purchase. The permanent mortgages would pay off the original loans made by Harper on behalf of First Community Bank and also include monies to pay Fouquet.

According to court documents, however, beginning in 2005, it became difficult for Harper and Fouquet to identify qualified home buyers to obtain permanent mortgages. As a result, Harper and Fouquet developed various methods to avoid reporting the delinquency on the loans made by Harper, on behalf of First Community Bank, to Fouquet and/or his companies.

One method used by the defendants, according to court documents, included Harper making ‘loans’ to prospective home buyers to make it appear to the permanent mortgage lender that the prospective home buyer had more funds on hand than he or she actually did. Another method employed by the defendants, according to court documents, was to use "nominee" loans or ‘straw’ borrowers to sign up for new First Community Bank loans, authorized by Harper, the proceeds of which were then used to pay off the original loans made to Fouquet and/or his companies.

‘The onset of the financial crisis was a crossroads for many bank executives,’ says Christy Romero, special inspector general at SIGTARP. "Executives had the choice of writing off losses on bad loans or covering up those losses through fraud. Harper chose the latter and concealed the status of the loans from others at First Community Bank, from the bank's regulators, and in the bank's TARP application. Bank executives who abdicated their fiduciary duties helped lead our nation's financial industry into crisis, and SIGTARP and our partners in law enforcement will ensure that justice is secured for those seeking to exploit TARP.’

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