Two former executives of the now defunct Nova Financial Holding Inc. have been found guilty for their roles in a circular loan scheme organized to defraud the U.S. Treasury Department’s bank bailout program in 2009.
Brian Hartline, 51, and Barry R. Bekkedam, 48, were found guilty by a federal grand jury on charges of conspiracy to defraud the federal government, fraud against the Troubled Asset Relief Program, or TARP, and two counts of false statements to the federal government.
In 2014, prosecutors had brought up charges against Bekkedam, the bank’s chairman, and Hartline, who served as the bank’s chief executive, for orchestrating a series of fraudulent loans which was issued to clients, who then immediately invested the money back into Nova bank, in order to help qualify the bank for a $13.5 million bailout.
But Bekkedam, who was very popular in the region during his playing days with the Villanova University basketball team in the 1980s, is insisting that he is innocent and has issued a statement saying the charges against him are “trumped-up and false.”
“The jury was persuaded, but I am and was innocent of any wrongdoing,” Bekkedam said.
Hartline’s lawyer, Patrick J. Egan, had also expressed his disappointment in the verdict. “I don’t think they understood the lack of evidence or the law,” he said in an interview.
One of Nova’s bank investors, George Levin, a Florida-based businessman who was also involved in a separate case of a Ponzi scheme that facilitated a $30 million investment in Bekkedam’s company, Ballamor Capital Management, which also received a line of credit from Levin. This case culminated in the closure of Ballamor Capital in 2010. Levin also received a $5 million loan from Nova.
Although, the Treasury Department rescinded its conditional offer of money to Nova for unrelated reasons, Nova was eventually closed by the Federal Deposit Insurance Corp. in October 2012. The special inspector general for TARP still believes that the bank executives were involved in a scheme to defraud the Treasury Department.
“The jury has brought justice to these bank executives who defrauded an emergency crisis-era rescue program,” said Christy Goldsmith Romero, the TARP special inspector general.
“The fact that the bank did not get TARP funds boils down to luck and timing, not because these defendants decided to come clean,” she said.
But Egan still stands by the innocence of his client, saying that they will appeal the case to the Third Circuit and even further, if need be.
“Quite frankly, there are so many problems with this case, it may get appealed all the way to the Supreme Court, because the bottom line is my client is not guilty and this is just wrong,” he said.
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