A key insider in the now-defunct Excel Bank (Sedalia, Mo.) was sentenced to 68 months in federal prison and ordered to pay more than $5 million in restitution Tuesday for his actions, the Federal Deposit Insurance Corp. (FDIC) Office of Inspector General (OIG) said.
The OIG, noting action resulting from its partnerships with U.S. attorneys’ offices and other OIGs and law enforcement entities, circulated a release Thursday that says Shaun R. Hayes, 58, of Frontenac, pleaded guilty to the scheme to defraud the bank and profit from insider illegal loans. Hayes was sentenced by U.S. District Judge Audrey G. Fleissig. Fleissig also ordered restitution totaling $5,048,003.67.
The restitution amount consisted largely of losses incurred by Excel Bank on the straw party loans, with most of the restitution being owed to the FDIC, the release says.
According to the release, Hayes was charged in April 2016 along with real estate developer Michael Litz on bank fraud and related charges involving a series of insider loans and straw party loans at Excel Bank, a federally insured bank with main offices in Sedalia, Mo. The bank failed in October 2012 and Simmons Bank succeeded it. Hayes and Litz each entered guilty pleas in January. (Litz was sentenced earlier this month to 36 months in prison.)
Hayes has been incarcerated since April 2017 for violating conditions of his bond.
The release says Hayes, among other things, assisted in getting Excel Bank to make millions in loans to straw parties to cover delinquent and substandard loans owed by Litz’s business to other banks. It says Excel Bank lost substantial amounts on these loans.
The release, which is reproduced from the one issued by the U.S. Attorney for the Eastern District of Missouri, notes a sentencing memorandum filed with the court that says Hayes was a principal at three banks which failed in 2011-2012 – Excel Bank, Sun Security Bank and Truman Bank. It says the FDIC reported an insurance fund loss for those three banks of slightly more than $160 million at the close of 2017. Excel Bank reportedly was also a recipient of funds from the Troubled Asset Relief Fund (TARP, the federal fund created to help banks during the financial downturn) that were never repaid.
Timothy Murphy, the former executive vice president at Excel Bank, pled guilty earlier this year to defrauding Excel Bank and was sentenced to probation based on his cooperation in the investigation, the release says.