Fraud at New Frontier Bank?
It’s been a while since I’ve written about the economic “fiasco” we’ve come to know as New Frontier Bank. The Denver Post published a lengthy, two-part investigative piece on the billion dollar failed bank. (Part 1 and Part 2)
The Post investigation found:
• With government inspections looming, the bank’s loan officers rewrote terms of delinquent loans, disguising steady asset deterioration, according to a former board member and records.
• New Frontier Bank executives staved off an effort by the bank’s federal regulator, the Federal Deposit Insurance Corp., to ban one of its high-performing loan officers accused of fraud at a previous bank. Later, that officer was convicted of theft for stealing deposits at New Frontier.
• The bank’s board authorized a $400,000 payment to one of its members whose used-car business was in financial trouble, sources said, despite a state law barring preferential treatment for bank insiders.
• After regulators told New Frontier in 2008 it needed to raise cash, bankers issued loans to at least a dozen borrowers who in turn agreed to buy stock in the bank. Such transactions can be illegal if coercion is proved.
Perhaps most important is this line: “A federal probe into potential fraud at New Frontier is underway by the Justice Department.” This is good news. Taxpayers, northern Colorado residents and small businesses would like to know if we are the only ones who will have to pay the price for Colorado’s largest bank failure.