(Reuters) - A former chief executive of Bank of the Commonwealth was sentenced on Wednesday to 23 years in prison and ordered to pay $333.6 million in restitution for running what federal prosecutors called a massive fraud that led to the failed Virginia lender’s demise.
The sentence imposed against Edward Woodard is one of the longest for a top bank executive over activities that prosecutors have said contributed to the hundreds of bank failures since the 2008 financial crisis.
Woodard, 70, was convicted on May 24 by a Norfolk, Virginia, jury of bank fraud and several other counts.
Prosecutors accused him and other Bank of the Commonwealth executives of providing preferential treatment to “friends of the bank” in return for favors, and hiding poorly performing assets to mask the bank’s deteriorating financial condition.
They said Woodard also enriched himself and his family by selling his condominium at an inflated price and letting customers use bank funds to buy his son’s troubled properties.
“Woodard’s felonious conduct, motivated by his own greed, destroyed a financial institution, left former bank employees jobless, and defrauded a federal recovery program out of millions of dollars,” Dana Boente, Acting U.S. Attorney for the Eastern District of Virginia, said in a statement.
Prior to its failure, Bank of the Commonwealth sought a $28 million federal bailout from the Troubled Asset Relief Program, but withdrew its application amid concerns from the Federal Reserve about its health, prosecutors said.
U.S. District Judge Raymond Jackson in Norfolk imposed the sentence, including the restitution to the Federal Deposit Insurance Corp, as well as five years of supervised release. Prosecutors had sought a 30-year prison term.
Lawyers for Woodard sought a term of less than 10 years, saying a “convergence of causes,” including the financial crisis and an unsuccessful growth strategy were primarily to blame for the bank’s failure. They also said Woodard’s health and his civic and charitable endeavors warranted a lesser punishment.
“We are relieved that the court didn’t impose the 30 years that the government requested, but are disappointed with the 23 year sentence,” Andrew Sacks, a lawyer for Woodard, said in a telephone interview. “We are going to pursue a vigorous appeal.”
Woodard is being held in federal custody, Sacks said.
Another former bank official, executive vice president Stephen Fields, is appealing his conviction and 17-year prison sentence in the case, court records show.
The FDIC on September 23, 2011, seized Bank of the Commonwealth, one of 389 U.S. lenders to fail between 2009 and 2011.
The case is U.S. v. Woodard, U.S. District Court, Eastern District of Virginia, No. 12-cr-00105.
Reporting by Jonathan Stempel in New York. Editing by Andre Grenon