The guilty plea of Jeffrey L. Levine is the latest aftershock of the failure of the Atlanta-based Omni National Bank, which was taken over by federal regulators in March. Levine, the bank's former executive vice president, is one of at least four people with ties to the bank to face federal charges since it collapsed.
Levine, 68, could face 30 years in prison and a fine of up to $1 million on charges that he cooked the bank's books to mask millions of dollars in losses on loans designed for investors who rehab run-down houses.
Levine's community redevelopment department doled out high-interest short-term loans to borrowers with lackluster credit who promised to renovate and then resell or rent houses in struggling neighborhoods, according to federal prosecutors.
But when the market collapsed and the bank was left with a string of foreclosures, Levine inflated the value of the loans to make it look like the bank's finances were in a stronger position than they really were, prosecutors said.
The tenants of the homes also suffered with increased crime rates because many of the distressed properties were never actually rehabbed, according to court records.
"This case demonstrates the damage that can result when senior bank officials ignore rules and regulations designed to protect a bank by identifying problem loans," said Sally Yates, the acting U.S. Attorney in north Georgia.
The case against Levine is part of a broader investigation launched after the collapse of Omni, one of 25 banks to fail last year in Georgia, the most of any state. Three bank customers have already been charged in the federal probe.
Mark Anthony McBride, 43, pleaded guilty in April to fraudulently obtaining millions of dollars in mortgage loans from Omni and other banks. McBride is in jail and is set to be sentenced in March.
Brent Merriell, 37, pleaded not guilty to charges in December that he stole identities and made false statements to make short sales on 14 properties that were in foreclosure.
And Delroy Davy, 37, said he would plead guilty this month to bank fraud charges in a scheme to secure millions of dollars of mortgage loans from Omni and other lenders.