The president of a US bank has pleaded guilty to using bailout funds to buy a luxury condo. Unfortunately for him, the size of his institution does not put its executives among the ‘too big to jail’ set.
“At a time when many other Americans were losing their homes, he was siphoning off public funds to buy a luxury vacation condo in Florida,” said Tammy Dickinson, US Attorney for the Western District of Missouri. “These federal funds were intended to help stablilize the economy during a fiscal crisis. Instead, this disgraced business leader took advantage of the situation to benefit himself and other bank executives, then lied to federal investigators in an attempt to hide his scheme.”
Under the terms of a plea agreement, Darryl Layne Woods – the former chairman and chief financial officer of Missouri's Mainstreet Bank – is required to desist from any further involvement in banking and may not serve as an officer, director, employee or affiliated party of any financial institution or agency. The government agreed not to bring any charges against his wife, Jackie Woods, for any criminal offenses arising as a result of its investigation.
Under federal statutes, Woods is subject to a sentence of up to one year in federal prison without parole, plus a fine up to $100,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
Woods pleaded guilty to misleading federal investigators about his use of $381,000 in bank bailout funds to purchase a luxury condominium in Florida. Woods was also chairman, president and majority shareholder of Calvert Financial Corporation, the bank’s holding company.
Calvert Financial applied to receive TARP funds in November 2008. The Department of the Treasury approved the request and in January 2009 it Calvert Financial received $1,037,000 through the program. Woods admitted that he used $381,487 of the funds to purchase the luxury condominium on 2 Feb., 2009.
“The purpose of TARP is to promote financial stability and lending in a time of national economic crisis, not to bankroll the purchase of luxury vacation properties for bank executives,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “When SIGTARP required Mainstreet Bank to disclose how it spent TARP funds, bank chairman and CFO Woods failed to tell the truth that within days of receiving the TARP funds, the bank spent more than a third of the funds purchasing a waterfront condo in Florida for his and other executives’ use.”
SIGTARP sent letters to various financial institutions seeking specific information as to how TARP funds were used by the institutions. Woods responded to that inquiry in a letter dated Feb. 10, 2009. He failed to disclose in his letter that a significant portion of funds had been used to acquire the condominium, which the government said was a material misrepresentation of facts.
Separately, in a statement on its website, the bank said the condo was acquired as part of its real estate portfolio. “In regards to bank owned real estate, specifically the condo in question, the bank’s business model dating back to early 2007 included investments in real estate, which the bank followed through to its logical conclusion. This was almost two years prior to the existence of TARP, and the recession crisis. The government informed the bank that no changes to its business model were necessary as a TARP recipient. Those rules changed a year after the funds were received by the bank. The bank currently has no real estate of this nature.”
The bank said the misleading document signed by Woods was prepared by a former bank executive for his signature, but Woods accepted his own responsibility. “The bank and board wish Mr. Woods and his family the best as the healing process begins,” it added.