A Different Kind of Bank Robber

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Not all bank robbers wear a black ski mask and enter through the front doors toting a firearm. Some operate smugly from within the walls of a financial institution, concealing that they are diligently transferring funds to bank accounts they manage. Today’s fraudster is a former community bank president from Rockville, Maryland. Not only did he conceal the fact that he stole $100,000 in bank funds, he also diverted hundreds of thousands of dollars from loan borrowers after he resigned. (Oh yeah, and by the way, he also committed tax fraud when he neglected to reveal the additional income.)

Today’s fraud article states that over ten months, the former bank president directed bank employees to wire funds he explained were mortgage broker payments for bank loan refinances to a company that happened to belong to a friend. (He didn’t tell the employees that last part.) The friend dutifully paid the $100,000 to the former banker, not knowing that what he was doing was illegal.

The banker resigned from his position as president and became the head of an affiliate of his former employer. Court documents show that while working for the affiliate, he devised a scam to defraud his former employer. He refinanced two bank-owned mortgage loans, then diverted the loan payoffs to himself and another co-conspirator. (He pulled off that feat by posing as the CEO and president of the bank where he used to work.) He invited the borrowers of the two loans worth $7.5 million to refinance with other financial institutions to pay off his former employer. Then, he directed the settlement companies to send the mortgage loan payoffs to an escrow account managed by his co-conspirator. The former bank president diverted more than $775,000. (He created fake correspondence with the two loan borrowers to conceal the stolen money.)

It gets deeper. The two co-conspirators owned another company that wanted to profit from a group of non-performing mortgages their company purchased. They figured they could donate some of the mortgages to a charity as an in-kind donation. (Then, as you might guess, they took a charitable deduction on their income tax returns.) The tax reduction passed through to their personal income taxes. (See how things are starting to add up?)

The former bank president from Rockville did not report the extra $176,000 in income in 2010. Nor did he report more than $480,000 in income from the loan fraud proceeds. (The article states he underpaid his taxes over three years by $365,228.80.)

The 58-year-old was convicted of bank fraud and taxfraud and was sentenced to serve three years in federal prison to be followed by two years of supervised release. (The former community bank president must also make a few withdrawals from his cover bank accounts.) He must forfeit $503,378.87 and pay $892,541.75 in restitution to the bank and $365,228.80 in restitution to the Internal Revenue Service. (I’d say this fraudster is officially broke.)

Today’s “Fraud of the Day” is based on an article entitled, “Rockville Man Sentenced to Prison for Bank Fraud,” posted on Patch.com on December 26, 2018.

ROCKVILLE, MD — A former bank president from Rockville was sentenced to prison for bank fraud and tax evasion on Thursday, Dec. 20, according to federal prosecutors.

David Harris Lavine, 58, was ordered to serve three years in federal prison, followed by two years of supervised release, after he stole $100,000 from a bank while he was president and diverted more than $775,000 from loan borrowers once he resigned. The former CFG Community Bank president was also ordered to forfeit $503,378.87, plus pay $892,541.75 in restitution to the bank and $365,228.80 in restitution to the Internal Revenue Service.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.