More Convictions of Minor Officials at Major Bank

July 2nd, 2011
in econ_news

Wachovia logo Econintersect:  There have been a lot of questions about when there will be criminal prosecutions of senior executives of major banks for their roles in the development of the financial crisis.  So far it seems that only the small fry are getting caught.  The latest cases involve two minor executives at Wachovia who have been convicted of embezzling over $11 million.  Scott Welch was sentenced to nearly six years in federal prison.  Another defendant, John Cousar, was also sentenced.

Follow up:

From the Raleigh News & Observer:

Scott Welch was sentenced in U.S. District Court in Charlotte on Thursday. The 48-year-old will also have to pay back the money to Wachovia and nearly $2 million to the IRS.

Fellow defendant John Cousar (KOO'-sar) was sentenced to nearly three years in prison and more than $7 million in total restitution. Both defendants also gave up hundreds of thousands of dollars' worth of assets, including Welch's lakeside home in Mooresville.

Two outside contractors have also been convicted in the case.  From the Charlotte Observer:

Welch and Cousar pleaded guilty in June 2010 to mail fraud conspiracy and tax violations for a scheme that involved the submitting of more than $11 million in bogus invoices to the bank over eight years.

As a vice president in utility services for Wachovia in Charlotte from 2000 to 2008, Welch oversaw the payment of invoices submitted by outside vendors for the Charlotte bank, which was bought by Wells Fargo in 2008. According to the U.S. attorney's office in Charlotte, Welch used his position to lead the conspiracy by directing Cousar and others to submit the false invoices.

According to court documents, Welch also evaded taxes on the $6.1 million in income he earned from the conspiracy by filing false tax returns. Cousar did not file income tax returns for the $5 million in income he received from the scheme.

Judge Cogburn emphasized the defendants provided substantial assistance and cooperation to authorities.

Welch and Cousar have been released on bond since pleading guilty. They will be ordered to report to a federal facility before being transferred into the custody of the Federal Bureau of Prisons. Federal sentences do not include the possibility of parole.

Co-defendants Delmar Dove, 60, of Charlotte; Jerry Little, 51, of Charlotte; and Robert Otto, 67 of Charlotte are awaiting sentencing after entering guilty pleas for submitting bogus invoices in connection with the scheme.

In early June GEI News reported the conviction of another Wachovia small-fry in Virginia.

At the height of the financial crisis in 2008, Wachovia became the largest bank failure in U.S. history not to be bailed out by the government and was taken over by Wells Fargo (NYSE:WFC).

Sources:  (Raleigh) News & Observer, Charlotte Observer and GEI News

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