Ex-Texas Bank President Charged With Bank Fraud, Embezzlement, and Arson

By - June 9, 2020
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A former Texas bank president is being charged with bank fraud, embezzlement, and arson after setting a fire in the bank to prevent state officials from seeing records that would implicate her in stealing $11 million in bank funds. (Foxnews.com)

Anita Moody, 57, from Cooper, Texas, pleaded guilty last week to conspiracy to commit bank fraud and arson before a federal judge. Moody was the president of Enloe State Bank in Cooper at the time the fire occurred in May 2019, federal prosecutors stated.

Moody had held the president’s job for more than 10 years. But since 2012, it was found out that she had been robbing the bank blind of millions of dollars with 100 fake bank loans.

Fire Consumed Bank Boardroom

The fire was set in the bank’s boardroom but the entire bank suffered substantial smoke damage, prosecutors added. Several files were stacked on the boardroom table, all of which were consumed by fire.

They noted that the federal investigation into the fire and bank showed that Moody had been making up fake nominee loans in the names of several bank customers. She admitted later to setting the fire to destroy the fake loan documents. (Justice.gov)

Moody also said she used the illegally obtained money to fund her boyfriend’s company, other businesses, and to enhance her lifestyle.

The fire was started one day before Texas bank examiners were to appear at the bank to review the accounting books. Moody has agreed to do seven years in federal prison and pay $11 million in restitution.

The fire and bank fraud case stunned the town of Cooper, which has 2,000 residents. The bank has since been shut down by regulators and is the first bank failure since 2013.

Ex-Bank President Dispairs at Fraud

Noel Bailey, the bank’s president for 30 years, told the media that the scandal hurt hundreds of people in the town. The Federal Deposit Insurance Corporation, the agency that protects people who put money in banks, estimates that it will cover $27 million of the bank’s $37 million in assets. (Dallasnews.com). But that does not include 10 bank customers with deposits above the FDIC limit of $250,000. About $500,000 went over the FDIC cap.

The Texas Department of Banking had scheduled a review of the bank the day after the fire. The agency had requested several sets of financial records for a regular financial examination. But the items were placed on the boardroom table and set on fire.

While the lack of oxygen kept the entire building from burning up, the building has suffered smoke damage that will take weeks to repair.

Legend Bank Attempting to Take On Enloe State’s Customers

Legend Bank appeared on the scene in Cooper recently to take on the failed bank’s insured deposits. But it stayed away from most of the bank’s fraudulent assets. It took over about $5 million assets, which was a fraction of its reported assets a few months earlier.

Legend Bank took on liquid assets that include cash, deposits at other banks, and bonds. To state regulators, Enloe State Bank was doing great on paper. Bank filings and regular examinations over several years did not show anything unusual.

In early 2019, the bank told the state it has $10 million in loans in farming. It also reported only $368,000 in past-due loans in the last year. First National, a nearby bank with a similar loan focus, had $585,000 in late loans.

State regulators take note when loans become late, but Enloe State Bank had only reported $47,000 in uncollectable loans in the last 60 months. Low numbers of bad loans also can be a red flag.

Following the Paper Trail

Tougher banking requirements were set up after the Great Recession. The new laws require regulators to focus on the largest banks, not ones with less than $40 billion in assets.

This means more man-hours are spent looking at banks that are ‘too big to fail’ and less time on the smaller community banks. In this case, it appears that regulators did not notice anything was amiss until it was too late.