Another former client of First NBC Bank has been charged with conspiracy to commit fraud in the wake of the New Orleans-based bank's $1 billion collapse two years ago.
Federal prosecutors announced Friday that they had charged Kenneth Charity, a developer and client of the bank for more than a decade, with conspiracy to commit bank fraud.
Charity is the third person to be charged in the case, in which the bank, founded by high-profile New Orleans financier Ashton Ryan, was seized by regulators in 2017, leaving the Federal Deposit Insurance Corp. on the hook for $1 billion. It was the biggest U.S. bank failure since the financial crisis of 2008-10.
The charges brought Friday allege that Charity used front companies and conspired with "Bank President A" — which, it is clear from previous charges filed in the case, is Ryan — to submit false documents to obtain loans that totaled $18 million by the time the bank collapsed in April 2017.
Charity was charged in a bill of information rather than a grand jury indictment, usually a sign that a defendant has agreed to plead guilty and cooperate with prosecutors.
The former top lawyer for First NBC Bank is expected to plead guilty next month to conspiring to defraud the New Orleans bank that collapsed i…
Gregory St. Angelo, who served as First NBC's general counsel, was charged in March in a similar bill of information. St. Angelo was both a bank employee and a major customer: Prosecutors accuse him of committing fraud to obtain more than $50 million in loans.
He has filed documents indicating he will plead guilty at the end of May.
The U.S. Attorney's Office is accusing Charity of a host of scams to falsify his financial condition, obtain loans for a property development that never happened, and use the proceeds to fund a lavish lifestyle.
The charges say Charity, with Ryan's knowledge, falsely claimed assets in excess of $350,000 from his father's trust. He is also accused of falsely claiming that companies he controlled were owed millions of dollars from a government program, whereas the supposed assets were, in truth, only possible grant proceeds.
First Assistant U.S. Attorney Michael Simpson said Charity also claimed rent receipts over a three-year period that were never collected, and that Ryan was aware of this.
The documents say Ryan also helped Charity to continue to file false financial reports in order to receive new loans to pay off old loans, despite knowing that Charity was insolvent.
Ryan "was well aware that Charity was unable to repay his loans, yet (Ryan) continued to falsely represent in bank records that Charity and his entities were profitable," the charges read.
The bill of information also details alleged frauds used to obtain about $1.5 million in funds that were supposed to be spent renovating a beignet shop at 620 Decatur St., in the French Quarter. In fact, they were used to cover bad loans and Charity's personal expenses, the document alleges.
Another scam the government says Charity, Ryan and unnamed "others" at the bank cooked up involved the purchase of the Lake Terrace Shopping Center, at Robert E. Lee Boulevard and Paris Avenue in Gentilly. Though they don't say how much money was involved, prosecutors allege the loan to purchase the shopping center and subsequent loans supposedly to be used to renovate it all ended up in an account controlled by Charity, who used the proceeds to renovate his swimming pool and pay lawyers' fees.
"When Charity sold the shopping center in February 2016, it was in such a state of disrepair that the City of New Orleans included as a condition of the sale that the new owner demolish the property within 60 days of the purchase," the charges say.
Ironically, First NBC Bank was to have been one of two anchor tenants in a new development at the site, but the bank collapsed before it could get underway. The site was eventually turned into an Ochsner drive-through medical facility.
A 2013 story in the Lens spotlighted Charity's failure to bring back the mall and noted he owed the city more than $100,000 in back taxes. The story also said he won a $250,000 grant from the city to help spur the mall's redevelopment. Charity received all but $25,000 of that amount, according to the Lens.
Last year, prosecutors charged another major First NBC customer, Jeffrey Dunlap, a Slidell-based contractor, who pleaded guilty last October. Dunlap confessed that he filed bogus loan paperwork, allegedly with Ryan's help, to secure a line of credit from First NBC of more than $22 million.
Dunlap, who had a series of separate private business dealings with Ryan, was due to be sentenced last month, but his hearing was pushed back to July 31.
The owner of a Slidell construction firm pleaded guilty Wednesday to conspiring to commit bank fraud, the first conviction in a broader probe …
Ryan is expected to face charges, as is one other First NBC official, former Chief Credit Officer Bill Burnell. Burnell has been referred to in charging documents as "Bank Officer B."
Edward Castaing, attorney for Ryan, said his client maintains his innocence.
Brian Capitelli, one of Burnell's attorneys, also said his client is innocent of any wrongdoing, adding that Burnell is not accused of having profited from any of the alleged scams.
Editor's note: This story was changed May 18 to correct the location of the Lake Terrace Shopping Center.