Five Houston-area contractors who performed property management
work for the FDIC and the Resolution Trust Corporation (RTC) were
sentenced in U.S. District Court in Houston last month for defrauding
the agencies. Sentences ranged from 8 years in prison to three years
probation. All five were also ordered to pay the FDIC restitution
totaling $251,343.
The contractors were hired by the FDIC and the RTC to manage several
properties the agencies acquired after various financial institutions
failed. The properties included two apartment complexes, a shopping
center, 1,500 properties/residences, and a commercial building.
Gregory Eugene August, Earline Montgomery, Martha Alexander, and
Willie Burns were found guilty in February of 39 federal offenses
associated with their contract work with the FDIC and the RTC. Ephraim
Tennie entered into a plea agreement and pled guilty to one count.
As part of their scheme, the contractors falsified records to
the FDIC and the RTC in order to hire as subcontractors several
shell companies they controlled. The defendants then falsely billed
the FDIC and the RTC for subcontractor expenses by creating fraudulent
invoices and falsely representing that the services had been provided
by their shell companies.
In his role as property manger, August also defrauded the RTC
by altering invoices he received from legitimate subcontractors
and submitting them to the RTC showing higher expenses than were
actually incurred.
The investigation was conducted jointly by the FDIC's Office of
Inspector General (OIG), the former RTC OIG, and the Federal Bureau
of Investigation.
In addition to the ordered restitution, to date the investigation
has resulted in recoveries of $180,817; seizures totaling $105,039;
recoveries for victims (subcontractors) of $26,875; and fines of
$8,500 for two prior indictments and convictions.
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Congress created the Federal Deposit Insurance Corporation in
1933 to restore public confidence in the nation's banking system.
The FDIC insures deposits at the nation's 12,000 banks and savings
associations and it promotes the safety and soundness of these institutions
by identifying, monitoring and addressing risks to which they are
exposed.
FDIC press releases and other documents are available on the Internet
via the World Wide Web at www.fdic.gov
or through Gopher at gopher.fdic.gov. They may also be obtained
through the FDIC's Public Information Center, 801 17th Street, N.W.,
Room 100, Washington, D.C. 20434 ((703) 562-2200).
