Bank President Jailed for Falsifying Books to Hide Bad Loans

Allison Tussey —  July 5, 2013 — 1 Comment

Stephen Henry, 46, Memphis, Tennessee, was sentenced to 24 months in prison and ordered to pay $2,424,000 in restitution as a result of his guilty plea to one count of misapplication of bank funds.

Henry was serving as president and CEO of Oakland Deposit Bank, which was owned by his family. According to information revealed during his plea hearing, Oakland Bank had made numerous loans to Stephen Sims, a local real estate investor. In late 2007, many of these loans were delinquent.

In an effort to keep the loans from going into default, Stephen Henry assisted Stephen Sims in using money from construction loans to pay on unrelated unsecured loans that had become delinquent. In addition, Stephen Henry manipulated the bank’s books and records to allow bank money to be used to pay on delinquent loans without being credited to a customer’s account.

The scheme eventually led to Sims defaulting on more than $2.4 million dollars in loans from the bank. Oakland Deposit Bank was forced to go into receivership and was taken over by officials with the Federal Deposit Insurance Corporation (FDIC). The bank was later sold.

For his role in the scheme, Sims pleaded guilty to three counts of bank fraud and was sentenced to 87 months in federal prison in July 2012. He was also ordered to pay more than $2.4 million in restitution.

In addition to the prison sentence and restitution, U.S. District Judge Samuel H. Mays, Jr. ordered Henry to serve five years of supervised release. There is no parole in the federal prison system.

This case was investigated by the Federal Bureau of Investigation and the FDIC. Executive Assistant U.S. Attorney Larry Laurenzi represented the government.

U.S. Attorney Edward L. Stanton, III announced the sentence.

“The court found that while he did not personally benefit from the fraud perpetrated against the bank, Mr. Henry’s failure to follow proper banking procedure enabled the scheme to defraud the bank,” said U.S. Attorney Stanton. “Today’s sentence serves as a warning to those in positions of authority that the failure to exercise due diligence can leave you exposed to serious criminal consequences.”

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One response to Bank President Jailed for Falsifying Books to Hide Bad Loans

  1. Robert G. Deardorff July 10, 2013 at 10:18 pm

    I am seeking information of misappropriation of funds from Capital Purchase Plan.
    Misappropriation of funds involved lender promissory notes, where the lender cannot find the original note and/or produce a certifiable copy.

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