Until recently, Darryl Woods was the chairman and Chief Financial Officer of Mainstreet Bank in Ashland, Missouri. Last week he pleaded guilty to defrauding the federal government and taxpayers. His crime? The feds say he took $381,000 of TARP bailout monies and used the cash to purchase a luxury condo in Fort Meyers, Florida. Now he faces a year in prison for TARP fraud.
TARP is the Troubled Asset Relief Program. Created by Congress immediately after the mortgage meltdown in 2008, the program was designed to strengthen banks, stabilize the U.S. financial system, restart growth and encourage banks to lend money. While some debate the success of the law, everyone agrees that TARP fraud must be vigorously prosecuted. Congress and the Treasury Department realized this as well and created SIGTARP – the Special Inspector General for the TARP program. It was investigators from SIGTARP along with the FBI that prosecuted Woods.
“The purpose of TARP is to promote financial stability and lending in a time of national economic crisis, not to bankroll the purchase of luxury vacation properties for bank executives,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “When SIGTARP required Mainstreet Bank to disclose how it spent TARP funds, bank Chairman and CFO Woods failed to tell the truth that within days of receiving the TARP funds, the bank spent more than a third of the funds purchasing a waterfront condo in Florida for his and other executives’ use. SIGTARP and our law enforcement partners will hold accountable and bring to justice those guilty of crimes related to TARP.”
The charge against Woods was only a misdemeanor but under the terms of his plea agreement, Woods can never work in the banking industry again. Woods will also have to repay the improperly used funds.
TARP fraud is hard to detect but can be prosecuted even if the money is paid back. Like robbing a bank, paying the money back at some later date doesn’t nullify the crime. In this case, Woods didn’t rob a bank; it was the bank that was committing the robbery.
Present or former bank employees with inside knowledge of fraud against TARP may be eligible for a percentage of whatever the government collects from those responsible for the fraud. While most of the TARP monies have now been repaid, the government can still collect significant fines under the Financial Institutions Reform, Recovery and Enforcement Act – FIRREA. Under that law, whistleblowers can receive an award of up to $1.6 million.
If you have inside, “original source” information about TARP fraud, give us a call. We represent whistleblowers and help them stop fraud and collect the largest award possible.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Minneapolis, Minnesota; Portland, Maine and San Francisco, California. Services available in many jurisdictions.
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Posted by Brian Mahany, Esq.