Ex-NOVA Bank CEO and president Brian Hartline and Barry Bekkedam, the bank’s former chairman, have been convicted of defrauding the government when trying to get over $13M in Troubled Asset Relief Program (TARP) funds.
By 2008, bad loans and investments had placed the bank at risk of failure. To try to save the bank, parent company NOVA Financial Holdings applied for about $13.5B in TARP funds. NOVA Bank then received approval for the money as long as it raises $15M from investors.
To make the bank appear more financially healthy, Hartline and Bekkedam made it seem as if outsiders were sending funds to NOVA Bank when, in truth, the bank was recycling its own cash. For example, Nova wired $5M to the account of a Florida businessman, who then wired the money to an account for investments in the parent company. In 2009, Hartline and Bekkedam persuaded two other people to make “investments” with the use of loans from the bank. They told employees to lie to the US Treasury Department about this new money.
The bank never did get the TARP funds that had been approved for NOVA, which went on to fail in 2012. Federal and state regulators closed down the bank.
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Failed bank’s CEO, chairman convicted of trying to scam $13M in TARP funds, HousingWire, April 29, 2016
TARP, Treasury.Gov