A $40 million ponzi scheme operated by bank customer Keith Franklin Simmons for two and a half years almost entirely through an account at the bank has led to CommunityONE Bank’s downfall. Simmons was convicted of securities fraud, wire fraud and money laundering following a jury trial in Charlotte in December 2010 and is being detained pending sentencing.
CommunityONE Bank N.A., based in Asheboro, N.C., with 45 offices throughout the state, has entered into a deferred prosecution agreement with the government related to its failure to file a suspicious activity report and maintain an effective anti-money laundering program.
The bank has agreed to pay $400,000 toward restitution to victims of the ponzi scheme. The agreement recognizes that the bank’s total value under the recapitalization and merger is $2.5 million, and requires the bank to pay 16 percent of its value, or $400,000, to the victims of the ponzi scheme.
“Banks asleep at the switch need to wake up,” said U.S. Attorney Tompkins. “Federal law requires banks to implement a robust and proactive anti-money laundering program to detect fraud and protect the public from harm.
“CommunityONE Bank turned a blind eye to criminal conduct occurring under its nose,” said Assistant Attorney General Breuer. “By agreeing to pay restitution to the victims of a customer’s investment fraud scheme, and to overhaul its anti-money laundering program, the bank has begun the process of righting its wrongs.
The agreement recognizes that the bank has committed to, and already taken significant steps toward, overhauling its anti-money laundering program. This resolution allows the bank, which had been critically undercapitalized according to information contained in court documents, to undergo a merger and recapitalization to survive, and to avoid losses from a bank failure to innocent account holders and to the FDIC fund estimated at $500 million.
The bank’s actions have resulted in a deferred prosecution agreement, which requires the bank to pay 16 percent of its value, or $400,000, to the victims of the ponzi scheme. The agreement also requires the bank to implement significant anti-money laundering measures. If the bank fully implements the required measures, the government will recommend dismissal of the criminal charge in two years.
According to information contained in court documents, the actions taken today were the result of an investigation related to the ponzi scheme operated by Simmons.
Defendant: CommunityONE Bank N.A. | Crime: Failing to maintain an effective anti-money laundering program | City: Asheboro, North Carolina | State: North Carolina | Date: not specified | Sentence: agreed to pay $400,000 in restitution | Amount: $400,000 | Total value: $2.5 million | Percentage: 16% |
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Key Facts
- State: North Carolina
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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