By Elaine Rackley
A former Stockbridge bank attorney was indicted Friday on federal bank fraud charges.
Robert E. Maloney Jr., of McDonough, was arraigned on the charges before United States Magistrate Judge Janet F. King.
A superseding indictment charged Maloney and two former top officers of "FirstCity Bank" of Stockbridge, Mark A. Conner, of Canton, and Clayton Coe, of McDonough, with conspiracy to commit bank fraud, bank fraud, conspiracy to commit money laundering, and related crimes in connection with misconduct at FirstCity Bank in the years before the bank's seizure by state and federal authorities on March 20, 2009, according to the U.S. Attorney's Office for the Northern District of Georgia.
A federal grand jury returned the superseding indictment on June 22, against Maloney, Conner and Coe.
Maloney is alleged to have taken extra payments in the form of "legal fees" from the fraudulent transactions, even though as corporate counsel he was actually a salaried employee of FirstCity Bank. He also allegedly helped launder and distribute funds to, or for the benefit of Conner, Coe, other alleged co-conspirators, or to himself, through an attorney trust account maintained at the bank.
Arraignments for Conner and Coe on the superseding indictment are scheduled for July 1, before United States Magistrate Judge King.
The superseding indictment replaces the initial bank fraud sealed indictment handed down on March 16, 2011, against Conner, 45, and Coe, 44, which resulted in their arrest.
"The [original] indictment alleges that Defendant Conner, the former Chief Executive Officer of FirstCity Bank, and Defendant Coe, a former senior lender, used the bank to finance millions of dollars worth of real-estate deals, in which they secretly had financial interests," said United States Attorney, Sally Quillian Yates in a March interview with the Henry Daily Herald.
"Defendant Conner diverted to himself over $5 million in just two years, under false pretenses, and by hiding his own personal financial interest in the loans," Yates said. "Perhaps most egregiously, as the bank plummeted towards collapse, the indictment alleges that he even sought federal taxpayer bailout money for the bank. Conner did not succeed in obtaining federal bailout money, and FirstCity Bank has since joined the over 50 other Georgia banks that have failed since 2008," added Yates.
In addition to the conspiracy and bank fraud charges, the indictment charges Conner with conducting a continuing financial crimes enterprise at the bank between February 2006, and February 2008, during which Conner's and his co-conspirators' alleged crimes, generated over $5 million in unlawful gross proceeds, according to the U.S. Attorney's Office.
Federal agents arrested Conner and Coe on March 20, and March 27, respectively, upon their return to the United States from the Turks and Caicos Islands, in the British West Indies. U.S. District Judge Steve C. Jones ordered Conner to remain in the custody of the U.S. Marshals Service pending trial, based on a risk of flight. Coe was released to home detention and electronic monitoring, according to the U.S. Attorney's Office.
Conner served in a variety of top positions at FirstCity Bank between 2004 and 2009, including as vice chairman of the board of directors, as a member of the banks' loan committee, as president, and later as acting chairman and chief executive officer.
Coe served as a vice president and as FirstCity Bank's senior commercial loan officer. Maloney served as FirstCity Bank's in-house counsel, or corporate counsel, between 2006 and 2009, according to evidence presented in federal court by U.S. attorney Yates.
While serving in these positions, Conner, Coe, and Maloney, along with their co-conspirators, allegedly conspired to defraud FirstCity Bank's loan committee, and board of directors, into approving multiple multi-million dollar commercial loans to borrowers who, unbeknownst to FirstCity Bank, were actually purchasing property owned by Conner or Coe personally, continued the federal documentation.
"The Federal Deposit Insurance Corporation (FDIC) Office of Inspector General (OIG) is pleased to join our law enforcement colleagues in announcing the indictment of Mr. Maloney for his alleged role in this multi-million dollar bank fraud and associated money laundering activities," said FDIC Inspector General, Jon Rymer. "It is especially important to investigate and prosecute cases where trusted professionals, such as attorneys who owe a fiduciary duty to the bank, violate that duty and abuse their positions to undermine the integrity of the financial services industry.
"The FDIC OIG is particularly concerned when fraudulent schemes mislead the FDIC's examiners and contribute to bank failures that cause losses to the Deposit Insurance Fund," added Rymer. "We are committed to preventing such threats to the safety and soundness of FDIC-insured banks throughout the country," he said.
"[Friday's] indictment involves another unfortunate example of allegedly brazen criminal conduct by senior bank officials who tried to conceal their fraud from regulators and improperly access TARP ( Troubled Asset Relief Program) funds, said Christy L. Romero, Acting Special Inspector General for the Troubled Asset Relief Program. "As the bank's top legal officer, Maloney maintained a position of trust within the bank and had a special duty to prevent and detect misconduct.
"The indictment alleges that Maloney violated his important gatekeeper responsibilities and conspired with Conner and Coe in a criminal scheme that victimized unwitting federally-insured banks who invested millions of dollars into fraudulent loans," added Romero.