Former CFO Admits Manipulating Bank Loan Portfolio to Auditors

Allison Tussey —  December 9, 2014 — Leave a comment

Craig S. On, 62, Berkeley, California, pleaded guilty to one count of Conspiracy to Make a Materially False and Misleading Statement to an Accountant. On admitted that he did not inform auditors about approximately $67 million in potential losses from the sale of loans held by the bank.

On is the former Chief Financial Officer of United Commercial Bank (UCB). UCB was a commercial bank headquartered in San Francisco, Calif., with branch offices throughout the United States as well as in China and Taiwan. Until 2009, its holding company, UCBH Holdings, Inc., was publicly traded on NASDAQ.

On Nov. 6, 2009, UCB was taken over by the Federal Deposit Insurance Corporation (FDIC). According to the Information, the Troubled Asset Relief Program provided approximately $297 million in federal funds to UCB on Nov. 14, 2008, during the 2008 financial crisis.

As previously reported by Mortgage Fraud Blog, On, beginning in 2009, together with others, engaged in a conspiracy to deceive UCB’s auditors by manipulating the bank’s books and records in a manner that misrepresented and concealed the bank’s true financial condition and performance and caused the bank to issue materially false and misleading financial statements in violation of 18 U.S.C. § 371. On further admitted that he did not inform UCB’s auditors about approximately $67 million in potential losses from the sale of loans or “notes” held by the bank even though he knew he was required to do so.

The maximum statutory penalty for a conviction for conspiracy, in violation of 18 U.S.C. § 371, is five years in prison and a fine of $250,000, plus restitution. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

U.S. Attorney Melinda Haag; Federal Deposit Insurance Corporation, Office of the Inspector General, Special Agent in Charge Wade Walters; Special Inspector General for the Troubled Asset Relief Program Christy Romero; Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau, Office of the Inspector General, Special Agent in Charge Scott Redington; and FBI Special Agent in Charge David J. Johnson, announced the guilty plea.

 

Adam A. Reeves and Robert David Rees are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Denise Oki, Phillip Villanueva, and Bridget Kilkenny. The prosecution is the result of a five year investigation by the FDIC Office of Inspector General, the SIGTARP, the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau Office of Inspector General, and the FBI.

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Allison Tussey

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