Actions result in conviction, indictment for misapplying bank funds, fraud

Two actions in which the Federal Deposit Insurance Corp.’s (FDIC) office of inspector general (OIG) partnered with federal law enforcement have resulted in a recent conviction and a recent indictment, the office said Tuesday.

In a release, the FDIC’s OIG said the partnerships with U.S. Attorneys’ Offices throughout the country and other OIGs and law enforcement entities resulted in:

  • The sentencing to 18 months in prison of former First State Bank of Camargo (Okla.) PresidentStephen Gregory Ward, 53, of Edmond, Okla., for conspiring to misapply bank funds. According to the Department of Justice (DOJ), charges filed in September 2017 indicate that banking regulators closed First State Bank of Camargo in 2011. The bank was critically undercapitalized, DOJ said, because Ward allowed bank insiders to pay personal and business checks when their accounts had insufficient funds. Between 2006 and 2011, DOJ said, the practice of using deposits of other customers to cover insiders’ overdrafts led certain bank employees to manipulate bank ledgers and records, which caused a significant under-reporting of overdrafts to the FDIC.  The charges identify numerous instances in which Ward personally took advantage of the bank’s illegal treatment of overdrafts, according to DOJ. On Sept. 29, Ward pleaded guilty to conspiracy.  On May 3, Chief U.S. District Court Judge Joe Heaton sentenced him to 18 months in prison, followed by three years of supervised release, and payment of $95,149, DOJ said. Two others from the bank were also sentenced by the court after pleading guilty to conspiring with Ward, DOJ said.
  • The indictment May 2 of Timothy A. Cosman, 42, of Harvard, Ill., with bank fraud related to loans he obtained from Busey Bank in Champaign, Ill. The DOJ said the indictment alleges that from February 2014 to April 2016, Cosman executed a scheme to defraud the bank. He allegedly inflated his assets to make the bank believe its loans would be more secure than they were. The charge, DOJ said, is the result of investigation by the FDIC’s OIG.

Former Camargo Bank President Sentenced to Prison

McHenry County Farmer Charged with Bank Fraud