Ex-Atlanta bank executive sentenced to 5 years

AP News
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Posted: Apr 22, 2011 5:51 PM
Ex-Atlanta bank executive sentenced to 5 years

The moment Jeffrey Levine got a call from federal prosecutors telling him he was the target of an investigation of suspected fraud at his Atlanta-based bank, he says he knew there was no use fighting. He told prosecutors not to bother with a trial, cooperated with investigators and pleaded guilty to his part in the national wave of financial trickery that a judge called "the crime of the century."

Levine, the 70-year-old former vice president of the failed Omni National Bank, was sentenced to five years in prison on Friday and ordered to repay more than $6.7 million in restitution for his role in a scheme to cook the bank's books to mask millions of dollars in losses. His case is a sign of the ramped-up focus on bank fraud in Georgia, which leads the nation with 59 bank failures since 2008.

Minutes after Levine's hearing, a judge sentenced Omni customer Delroy Davy to 14 years in prison for giving kickbacks to a bank officer and participating in a house-flipping scheme.

Omni, which started in 2000, focused mostly on residential projects in struggling urban areas. Levine was in charge of a unit that doled out high-interest, short-term loans to borrowers with lackluster credit who promised to renovate houses in struggling neighborhoods.

But when the economy collapsed and the bank was left with foreclosures, prosecutors said Levine tried to boost the bank's bottom line by altering financial records to inflate the value of the loans. That, in turn, hid the bank's precarious financial situation from shareholders and auditors, they say.

Some of the properties wound up being resold up to five times at ever-increasing amounts, and other foreclosures were never disclosed on Omni's books, prosecutors said.

The bank collapsed in March 2009 because of crippling financial problems made worse by fraud, and prosecutors say Levine's actions caused more than 500 foreclosures and another 500 faulty loans that resulted in at least $7 million in losses. And they say most of the loans his department made never reached the homes they were supposed to help renovate.

Many of the distressed properties were never rehabbed and left vacant _ or worse, inhabited with squatters, prosecutors say.

"Levine and others falsified the books to conceal that Omni was crumbling, and then, leaving the FDIC holding the bag for $7 million after Omni failed," said U.S. Attorney Sally Quillian Yates. "Now he will spend the next five years in prison."

The executive pleaded guilty to the charges in January 2010, and his early agreement to cooperate with investigators allowed them to focus more resources on nabbing others involved in bank fraud, said Gale McKenzie, the lead prosecutor.

She said that's one of the reasons prosecutors and defense attorneys filed a joint recommendation asking U.S. District Judge Owen Forrester to sentence Levine to five years in prison _ far below the 30 years he could have faced.

Along with Davy, three others with ties to the bank face federal charges. Ex-Omni officer Karim Lawrence pleaded guilty in January to accepting bribes, and Christopher Loving, a bank customer, was sentenced to three years in probation for making false statements to investigators.

Brent Merriell, another bank customer, was sentenced to three years in prison in August for making false statements to investigators regarding short-sales of Omni-funded properties.

At Friday's hearing, Levine's wife Sally urged the judge to make sure her husband has enough time to rebuild his life and restore the reputation, saying "I hope he has time to rewrite this first paragraph of the obituary." And Jeffrey Levine apologized for his actions.

"I'm profoundly, profoundly sorry for my behavior and the pain it has caused and I will regret my actions for the rest of my life," he said. "I knew they were wrong when I did them."

But Forrester said his apologies weren't enough, and took him to task for contributing to national economic woes.

"You managed to participate in the crime of the century," Forrester told Levine. "Globally, the whole financial industry is on its heels."