SEATTLE, WA – James E. Bishop, 70, of Mount Vernon, Washington, is headed to federal prison after being sentenced to three years for knowingly falsifying regulatory documents as the former Chairman and CEO of Summit Bank. The sentence, handed down in U.S. District Court in Seattle, also includes two years of supervised release. Bishop pleaded guilty August 21, 2013, to Making a False Entry in a Report of an Insured Bank, a charge that exposed a calculated scheme to mislead federal regulators and protect his own fortune.
The scheme, spanning 2009 to 2011, involved Bishop and his son, James E. Bishop II – who served as the bank’s president – concealing the growing number of loans in default. They engaged in “a high-stakes shell game” designed to deceive the Federal Deposit Insurance Corporation (FDIC), as stated by U.S. Attorney Jenny A. Durkan. Summit Bank ultimately failed and was sold in May 2011, leaving the public to shoulder the risk of the concealed losses. Chief U.S. District Judge Marsha J. Pechman highlighted the length of the deception, the extent of the manipulated accounts, and Bishop’s control over employees who were pressured to remain silent.
Court records detail how Bishop, starting in 2005, leveraged his position as CEO and Chairman to manipulate the bank’s financial reporting. The bank was obligated to report accurate loan statuses to the FDIC. Instead, Bishop directed transactions to mask past due loans, inflating the bank’s apparent financial health. A June 30, 2010 report, for example, stated approximately $6 million in past due loans. The truth? At least $13 million was actually delinquent. This wasn’t a simple accounting error; it was deliberate falsification designed to stave off regulatory scrutiny.
The FBI and FDIC Office of Inspector General (FDIC-OIG) jointly investigated the case, recognizing the complexity of the fraud. “Collaboration between our offices brought specialized resources to bear,” said Special Agent-in-Charge Laura M. Laughlin of the FBI Seattle office. Fred W. Gibson Jr., Acting Inspector General for the FDIC, emphasized the importance of holding Bishop accountable for undermining the integrity of the FDIC’s examination process. Bishop will also be permanently banned from participating in any federally insured financial institution.
Beyond the prison sentence, Bishop has agreed to pay $300,000 to the FDIC as part of a civil enforcement agreement. His son, James E. Bishop II, who also faces charges in the case, is scheduled to be sentenced on December 6, 2013. This case serves as a stark reminder that those who prioritize personal gain over the stability of financial institutions will face the full weight of federal prosecution.
Assistant United States Attorney Matthew Diggs prosecuted the case, bringing the scheme to light and securing a conviction. The investigation underscores the critical role of federal agencies in safeguarding the financial system and protecting the public from fraudulent practices. This isn’t just about numbers on a balance sheet; it’s about the real-world consequences for communities when trust in financial institutions is betrayed.
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Key Facts
- State: Washington
- Agency: DOJ USAO
- Category: White Collar Crime
- Source: Official Source ↗
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