Omni National Bank Executive Pleads Guilty

Jeffery Levine the Executive Vice President for Omni National Bank pleaded guilty in federal court. Mr. Levine was the second largest shareholder in the now defunct bank and the head of the Community Redevelopment Lending Department for the bank. He co-founded the bank with Stephen Klein in 2000 and was with the bank up until October of 2007.

Mr. Levine who is 68 years of age and from Atlanta, Georgia was accused of causing over five hundred foreclosures and over five hundred non-performing loans due to his actions which ultimately lead to the Omni National Bank’s collapse and over seven million dollars in losses to the Federal Deposit Insurance Corporation.

Mr. Levine for his actions created fraudulent entries to the banks accounting books, reports and statements with regard to the bank’s assets by falsely showing over values. In addition, in order to keep non-performing loans showing as current on paper he failed to disclose many exceptions to procedures and put Omni in a position of being exposed to a greater loss. Several procedures and practices often went unreported which include such things as diversion of loan proceeds escrowed for rehabilitation; lending to borrowers over the banks limit to any individual borrower; funding additional loans for loans in foreclosure at increasing amounts; failure to create additional reserves for at risk loans and failure to properly record those loans on bank records.

Omni National Bank was taken over by the Federal Deposit Insurance Corporation on March 27, 2009. The bank was head-quartered in Atlanta, Georgia and had branches in cities such as Birmingham, Tampa, Chicago, Fayetteville, Houston, Dallas and Philadelphia. The bank borrowed federal funds in order to make high interest rate loans with short term periods through the Community Redevelopment Lending Department headed by Mr. Levine. The borrowers the bank was lending to often were low income investors with less than perfect credit and in some cases were not employed. The investors often purchased properties in low income neighborhoods with the intent of repairing the home and reselling or renting to section 8 families.

The borrowers of these short term loans were suppose to rehabilitate the properties on their own and within a few months and then re-qualify for a loan term loan when the property was re-valued or rented out. Investors expected the value to be well over the value of the new loan based on the rehabilitation.

Mr. Levine and others within the company were aware of foreclosures that were should have been in Omni books that were not going to resell for the amount of loan that Omni currently had on record and for this reason, hundreds of foreclosures were not recorded on Omni’s books. Some properties were sold at inflated prices in order to cover the losses on properties already foreclosed on. Subordinates were order to clear the properties in such a matter.

Due to Mr. Levine’s actions the evidence shows that section 8 families are the ultimate victims of Mr. Levine’s crime. The tenants suffered because many of the properties were not rehabilitated properly and often stood vacant and subject to squatters for years. The resulting vacant properties and squatters corrupted other section 8 properties and communities and created unstable housing.

Mr. Levine was charge on December 22, 2009 with causing and making others to make material false entries that overvalued the bank’s assets, books, reports and statements. Mr. Levine pleaded guilty to the charge which carries a maximum sentence of up to thirty years in federal prison and a one million dollar fine. Mr. Levine is schedule to appear before United States District Judge Jack Camp on March 23, 2010 at 2 P.M for sentencing in his case.

Three others have been charged in the case surrounding Omni National Bank’s failure.

Delroy Oliver Davy, age 37, from Lithonia, Georgia was charged on December 18, 2009 with bank fraud and conspiracy to commit bank, mail and wire fraud. Mr. Davy schemed to defraud Omni National Bank in relation to mortgage loans we obtained by fraudulent means. Mr. Davy pleaded guilty to the charges in January however a sentencing date has not been set.

Mark Anthony McBride, age 43, from East Point, Georgia was charged on April 4, 2009 with bank fraud and conspiracy to commit bank, mail and wire fraud. Mr. McBride pleaded guilty to the charges and is scheduled to appear before United States District Judge Jack Camp on March 2, 2010 at 2 P.M. Mr. McBride is currently in jail while waiting for his sentence.

Brent Merriell, age 37, from Atlanta, Georgia was charged on December 15, 2009 with six counts of identity theft and making fraudulent statements on his request for short sale of fourteen properties he owns. Mr. Merriell was facing foreclosure on all fourteen properties. Merriell has pleaded not guilty to the charges and currently is in jail awaiting trial. No trial date has been set.

The case is being investigated by a Mortgage Task force that includes The Federal Deposit Insurance Corporation, The United States Postal Inspection Service, The Federal Bureau of Investigation and others.

Acting United States Attorney Sally Quillian Yates stated that this case represents how senior officials ignore the rules and regulations that were put in place to protect the banks from failure. Executives that ignore the rules and regulations should be held accountable for their deliberate failure to abide by the rules.