Bank Directors and Officers Charged with Inaccurate Reporting of Loan Impairment

The directors and officers of a bank were charged with engaging in schemes to conceal the extent of the bank's loan losses during the financial crisis.

An SEC complaint found the following:

• Upon learning that the collateral for numerous loans was no longer sufficient to protect the bank, and that borrowers for many of the largest loans in the bank's portfolio did not plan to make further payments, the bank's officers improperly extended, renewed and rolled over bad loans to avoid classifying the loans as impaired thereby increasing the allowance for loan and lease losses.
• Some of the officers engaged in additional fraudulent accounting activities regarding the bank's loans held for sale in the portfolio thereby affecting the treatment of a deferred tax asset.
• In an effort to raise capital when the bank was on the brink of failure, several of the officers committed fraud by deceiving an individual investor in a $10 million private preferred stock sale.

The bank failed in 2011.