A man from Niceville, Fla., has pleaded guilty to conspiracy to defraud First NBC Bank, the New Orleans-based bank that failed in April 2017.
The New Orleans U.S. Attorney said that Gary R. Gibbs, of Niceville, pleaded guilty to one count of conspiracy to commit bank fraud,. The maximum penalties that may be imposed at sentencing are 30 years in prison; a fine of the greater of twice the gain to Gibbs or twice the loss to any victim; and up to five years of supervised release.
In July, federal prosecutors charged Gibbs with conspiracy to defraud the New Orleans bank of more than $123 million. The bill of information filed by federal prosecutors outlined a convoluted scheme allegedly involving Gibbs and executives of the failed bank over the period of 2010-17. The prosecutors alleged that Gibbs repeatedly arranged loans with the bank and, when he did not repay them, allegedly obtained new loans from the bank to pay for those he already had, with the knowledge of bank officials.
However, ultimately, Gibbs told the bank he could not – or would not – repay the loans at all, according to the U.S. Attorney.
“When Gibbs told Bank President A and Bank Officer C that he was considering filing bankruptcy or not paying his loans, Bank President A told Gibbs that First NBC Bank could not afford for Gibbs to default on the loans,” federal authorities said in their information documents. “After that, Bank President A and Bank Officer C continued to make false statements and material omissions in loan documents to hide from the Board, auditors, and examiners that the purpose of the new loans was to keep Gibbs and his entities from defaulting and that, in reality, Gibbs was not able to make his payments to the bank without receiving proceeds from new loans.”
Federal prosecutors alleged that neither Bank President A nor Bank Officer C ever disclosed to the bank’s board, auditors, or examiners that Gibbs was considering defaulting on his loans or filing bankruptcy, “because that would have revealed that Gibbs did not generate enough cash to pay his loans.”
Further, the law enforcement authorities said, the bank officials allegedly told Gibbs to inflate financial statements provided to the bank to hide their scheme by “falsely increasing the income of Gibbs’ entities to hide the amount of money those entities were losing.” The bank officials also, according to prosecutors, did not tell the bank’s board, auditors or examiners about those directions.
“By the time First NBC Bank failed in April of 2017, Gibbs and his entities owed the bank over $123 million,” prosecutors alleged.
The Federal Deposit Insurance Corp.’s (FDIC) office of inspector general assisted the FBI in the investigation of the case; the Federal Reserve and the Consumer Financial Protection Bureau (CFPB) also investigated, the U.S. Attorney said.