Bank Executive Pleads Guilty in Georgia

Jeffery L. Levine, Executive Vice President for Omni National Bank pleaded guilty for this role in the Atlanta, Georgia banks collapse on Thursday, January 14th.  Mr. Levine is believed to be the first Georgia Bank Executive to be held accountable for his role in the Georgia banking system collapse. Omni National Bank is just one of thirty Georgia Banks that have failed during the state’s banking crisis.

Mr. Levine, age 68, faces a sentence up to thirty years in prison for altering bank ledgers to conceal the losses and mislead bank regulators, shareholders and others into believing that the bank was solid in its foundation. He is scheduled to be sentenced on March 23, 2010 and can also face a fine of up to one million dollars for his actions.

The Atlanta, Georgia division of Omni National Bank reported profits throughout the last decade which were generated by loans to investors who flipped homes in low income neighborhoods. The profits were actually a mirage according to federal prosecutors. The mortgage loans that Omni approved rather quickly often ran into trouble as investors and borrowers who had little, bad or no credit began to default on the loans that Omni quickly approved. The homes began to fall into foreclosure and left neighborhoods in ruin.

Mr. Levine’s plea came after ten months after Omni National Bank failed under the mounting pile of bad real estate loans. The difference between Omni National Banks failure and other banks in Georgia that have failed is that Omni National Bank was in sever financial shape and no buyers could be found to purchase the bank. Federal Regulators estimate the loss at over two hundred ninety million dollars.

Acting United States Attorney for the Northern District of Georgia, Sally Quillian Yates stated that this only goes to demonstrate what damage can result when Senior Bank Officials ignore the rules and regulations set forth and designed to protect a bank by identifying bad loans.

Federal Regulators built a case against Mr. Levine while probing into a wide range probe of Omni National Bank. The probe has also brought charges against three Omni National Bank customers. Delroy Davy, from Lithonia has been accused of paying Kickbacks to an Omni National Bank Loan Officer and obtaining loans from the bank that were fraudulent in nature.

Mr. Levine’s Attorney Jack Williams provided a statement via email that stated Mr. Levine was cooperating with the federal government and its continuing investigation against Omni. He stated that Mr. Levine has suffered substantial financial loss as a result of Omni National Banks failure. He went on to say that Mr. Levine regrets his errors in judgment and his mismanagement of the bank.

Omni National Bank was founded in 2000 by Mr. Levine and business partner Stephen Klein. The bank rapidly grew into seven additional branches in prominent cities such as Chicago, Tampa, Houston and Dallas.

The banks mission was to make loans that contained a high interest factor for a short period of time to low income investors who wanted to purchase properties to fix and resell the properties in the inner city. The low-income investors in theory would make a profit after they fix and resold the properties or rented the properties out to Section 8 renters.

The bank as a whole violated several rules pertaining to banks. One of the rules that the bank did not follow was make loans that exceed the banks limit to lend to any one individual and not to multiple borrowers. The bank also did not have sufficient reserves to cover any losses that it might incur from failed loans and it did not property record those loans on its ledgers according to prosecutors in the case.

Mr. Levine directed subordinates to clear off foreclosures buy financing loans to new buyers. The bank often sold properties at inflated prices in order to cover foreclosures and often those foreclosures were never recorded at all. According to prosecutors these practices resulted in the bank’s failure and over five hundred foreclosures and over five hundred non-performing loans. Federal Deposit Insurance Corporation incurred over seven million dollars in losses as a result.

The resulting fallout is wide spread among the communities involved. The large numbers of Omni back properties were rented to low-income families and in fact were not repaired appropriately. Properties were left vacant which often resulted in squatters taking over the property.

Kenneth Donohue, Inspector General for the United States Department of Housing and Urban Development stated that Section 8 rental subsidies families should expect safe, decent and sanitary housing and in this case the poor stewardship and mismanagement of the properties involved has left a negative impact on the surrounding neighborhoods.

Delroy Davy, age 37, was formally charged with bank fraud in December of 2009 for his scheme to defraud the bank by obtaining fraudulent loans. According to officials he plans to plead guilty of the charge against him.

Mark Anthony McBride, age 43, from East Point, pleaded guilty in April of 2009 to bank fraud for his scheme to defraud the bank and other banks by obtaining fraudulent loans. Mr. McBride is currently in jail awaiting sentencing.

Brent Merriell, age 37, from Atlanta, was charged in December of 2009 for stealing identities and making false statements in regard to a short sale scheme on fourteen of his properties that went into foreclosure. Mr. Merriell has pleaded not guilty to the charge and is in jail awaiting trial.

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