Chief Credit Officer Admits to Conspiracy to Defraud First NBC Bank
Published 6:45 am Wednesday, September 14, 2022
NEW ORLEANS – United States Attorney Duane A. Evans announced that WILLIAM J. BURNELL (“BURNELL”), age 72, a resident of Kenner, Louisiana, pleaded guilty today to conspiracy to defraud First NBC Bank (“ Bank “), the New Orleans-based bank that failed in April 2017.
According to court documents, from in or around 2006 through April 2017, BURNELL was the Bank’s Chief Credit Officer. He was responsible for the overall quality of the Bank’s lending function; the Bank’s credit policies and administration; the Bank’s loan recovery and collection efforts; and the Bank’s monitoring and managing of past due loans, including the approval of the Bank’s internal list of past-due loans. BURNELL was responsible for compiling month-end reports, including lists of overdrawn borrowers and past-due loans. These reports should have accurately shown the quality of the Bank’s assets, which included loans. Misrepresentations on these reports made a true assessment of the Bank’s overall financial well-being impossible. BURNELL was also responsible for approving credit risk ratings before the Bank decided to lend to its customers.
Other people involved with the Bank, including the Bank’s board of directors, external auditors, and federal and state regulators, relied on BURNELL as the Chief Credit Officer to inform them about problems with the Bank’s asset quality, including problems with loans. Nevertheless, BURNELL conspired with the Bank’s President Ashton J. Ryan, Jr., Executive Vice President Robert B. Calloway, Senior Vice President Fred V. Beebe, and others to conceal material information and defraud the Bank. For example, BURNELL, Ryan, and Calloway knowingly concealed material information about borrower Gary Gibbs from the board, auditors, and examiners. Further, BURNELL served as an additional approving officer for loans to borrower Warren Treme, who was Ryan’s business partner. Beebe was Treme’s loan officer. BURNELL, Ryan, and Beebe made misrepresentations in Treme’s loan documents and to the board, auditors, and examiners, in ways that financially benefited Ryan. Calloway, Gibbs, and Treme have all previously pleaded guilty to conspiracy to defraud the Bank, as have the Bank’s General Counsel Gregory St. Angelo, borrower Kenneth Charity, borrower Jeffrey Dunlap, and borrower Arvind Vira. The trial for Ryan, Beebe, and borrower Frank Adolph is scheduled to begin on January 3, 2023.
“Today’s guilty plea once again demonstrates that the FDIC OIG and our law enforcement partners from the United States Attorney’s Office, Eastern District of Louisiana; Federal Bureau of Investigation; and the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Office of Inspector General will continue to investigate those individuals, including bank directors and officers who are entrusted to manage financial institutions, but cause harm to our nation’s banking industry,” said Anand Ramlall, Special Agent in Charge, Dallas Region, Office of Inspector General for the Federal Deposit Insurance Corporation.
“Today’s plea agreement illustrates the FBI’s steadfast commitment to bringing those who commit white collar crimes to justice, like Mr. William J. Burnell,” said Douglas A. Williams, Jr., Special Agent in Charge, FBI New Orleans. “We thank our partners from the United States Attorney’s Office, Eastern District of Louisiana; Federal Deposit Insurance Corporation, Office of Inspector General; and the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Office of Inspector General for their strong partnerships in protecting the integrity of the American banking system.”
“Today’s plea sends a clear message that bank executives who commit fraud and deliberately deceive regulators will be brought to justice for their actions. I commend our agent and their federal law enforcement partners for their hard work and persistence, which ultimately led to this outcome,” said Stephen Donnelly, Acting Special Agent in Charge, Eastern Region, Office of Inspector General for the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection.
BURNELL has pleaded guilty to one count of conspiracy to commit bank fraud, in violation of Title 18, United States Code, Sections 1344 and 1349. The maximum penalties that may be imposed upon conviction are thirty years in prison; a fine of up to $1,000,000, or the greater of twice the gain to BURNELL or twice the loss to any victim; up to five years of supervised release; and a $100 mandatory special assessment fee .
Judge Eldon E. Fallon scheduled BURNELL’s sentencing for March 16, 2023, at 2:00pm.
This case is being investigated by the Federal Bureau of Investigation; the Federal Deposit Insurance Corporation, Office of Inspector General; and the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Office of Inspector General. Assistant U.S. Attorneys Matthew R. Payne, Nicholas D. Moses, J. Ryan McLaren, and Rachal Cassagne are in charge of the prosecution.