Banker Sentenced to 10 Years for Fraud

Allison Tussey —  May 13, 2011 — 1 Comment

Robert Randal Jones, 50, Cornelia, Georgia, was sentenced by United States District Judge William C. O’Kelley to serve 10 years in federal prison for orchestrating a conspiracy to defraud Community Bank & Trust (“CB&T“). Three other co-defendants were also sentenced for their participation in the scheme.

Jones was sentenced to 10 years in federal prison to be followed by 5 years of supervised release. Jones was ordered to pay restitution in the amount of $5,907,031. Jones was also ordered to perform 1000 hours of community service following his release from prison. Jones was remanded to federal custody immediately after the sentencing hearing.

Joseph C. Penick, Jr., 51, Cornelia, Georgia, was sentenced to 2 years in federal prison, to be followed by 5 years of supervised release, ordered to pay $2,058,252 in restitution, and ordered to perform 600 hours of community service.

Douglas C. Emig, 55, Clarkesville, Georgia, was sentenced to 3 years in federal prison to be followed by 5 years of supervised release, ordered to pay $2,786,948 in restitution, and also ordered to perform 600 hours of community service.

Berrong Moulton, 46, of Cleveland, Georgia, was sentenced to 2 years, 6 months in federal prison, to be followed by 5 years of supervised release, ordered to pay $2,373,086 in restitution, and also ordered to perform 600 hours of community service.

According to the information presented in court: From February 2005 through May 2009, while Jones was CB&T‘s Executive Vice-President and Chief Credit Officer, he conspired to commit bank fraud with some of CB&T‘s customers, including Penick, Emig, Moulton.

In June 2005, Penick obtained a loan for approximately $500,000 from CB&T to finance his purchase of 54 acres of land in Hart County, Georgia. Jones approved this loan on behalf of CB&T. A month later, Jones arranged for Penick to sell the 54 acres to Emig for more than $1.6 million (resulting in a profit to Penick of more than 300%). Jones also approved a loan related to this purchase on behalf of CB&T. Out of his share of the profits from the sale of the 54 acres, Penick paid a kickback to Jones of more than $400,000 and paid a kickback to Emig of $270,000.

In August 2005, Penick obtained a loan for approximately $672,000 from CB&T to finance his purchase of another 98 acres of land in Hart County, Georgia. Jones approved this loan on behalf of CB&T. Eight days later, Jones arranged for Penick to sell the 98 acres to Emig for approximately $1.6 million, resulting in a profit to Penick of more than 240%. Jones also approved a loan to Emig to make this purchase on behalf of CB&T. Out of his share of the profits from the sale of the 98 acres, Penick paid a kickback to Jones of more than $371,000 and paid a kickback to Emig of $200,000.

In addition, Moulton, a real estate developer and home builder, owed millions of dollars to CB&T on various personal and business loans, which he could not afford to repay. In an effort to prevent bank regulators from discovering how much money Moulton had borrowed from CB&T, and in order to provide Moulton with the funds he needed to pay the interest on his past-due loans at CB&T, Jones and Moulton caused CB&T to make fraudulent loans to straw borrowers for Moulton‘s use and benefit. These loans were made in the names of Moulton‘s mother, wife, and daughter, as well as a fictitious entity called “ABK Designs.” The total principal amount of these fraudulent loans was approximately $2.8 million. Moulton‘s mother, wife, and daughter had no knowledge of the fraudulent loans and did not benefit from them in any way. Moulton used the proceeds of the fraudulent loans to make payments on his past-due loans at CB&T.

The evidence also showed that Jones fraudulently obtained more than $800,000 from CB&T through a series of fraudulent loans that he set up in the names of various members of his own family, without their knowledge or consent. Jones forged the signatures of the people in whose names he obtained these loans and then used the loan proceeds for his own personal purposes.

All of the defendants were ordered to forfeit any and all fraud proceeds they obtained as a result of their offenses. Jones forfeited his entire interest in, among other things, the franchise rights to six “Zaxby’s” restaurants, eleven real properties, two certificates of deposit, three investment accounts, and approximately $150,000 in jewelry.

Penick and Emig pleaded guilty on August 27, 2010, to a Criminal Information charging one count of conspiracy to commit bank fraud. Moulton pleaded guilty on September 30, 2010, to a Criminal Information charging one count of conspiracy to commit bank fraud. Jones pleaded guilty on January 20, 2011, to a Criminal Information charging one count of conspiracy to commit bank fraud.

These cases were investigated by Special Agents of the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation, Office of Inspector General.
Assistant United States Attorneys Russell Phillips and Gerald S. Sachs prosecuted the cases.

United States Attorney Sally Quillian Yates said, “Bank fraud is a critical problem affecting the whole country, but it has hit Georgia especially hard. Georgia leads the country in bank failures recorded since 2008, with 52 banks failing–including CB&T, the bank this defendant defrauded. Prosecuting bank fraud continues to be one of the major priorities of our office and the Department of Justice.”

Jon Rymer, Inspector General, Federal Deposit Insurance Corporation, said of the case, “The Federal Deposit Insurance Corporation Office of Inspector General is committed to its partnerships with others in the law enforcement community as we jointly pursue bank fraud cases throughout the country. The American people need to be assured that their government is working to ensure integrity in the financial services industry. A case like this one–where land flip transactions contributed to multi-million dollar losses to Community Bank and Trust, Cornelia, Georgia — proves that those engaging in criminal activities that undermine that integrity will be held accountable.”

For further information please contact Sally Q. Yates, United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016.

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One response to Banker Sentenced to 10 Years for Fraud

  1. Vanessa Jeffries May 13, 2011 at 11:32 pm

    This case started in 2005 and only got a resolution this 2011. Wow! that was a really long trial. I can only imagine the paper trail on this one

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