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US bankers, developer charged in million-dollar fraud

May 08, 2010

Two bankers and a hotel developer were charged Friday with fraud and insider trading, in a case pursued by President Barack Obama's Financial Fraud Enforcement Task Force, the Department of Justice said.

The suspects, from 2004 to 2007, arranged loans under false pretences for a total of 80 million dollars, one fourth of which was pocketed by the developer who lived in luxury and even bought himself an island in the Bahamas, the DoJ said in a statement.

The bankers, meanwhile, sold all of their shares of the Atlanta, Georgia-based Integrity Bank they worked for, which was getting into deep financial trouble because of the loans to the hotel developer.

"The indictment charges that in essence they allegedly took advantage of secret inside information to sell stock that they knew to be overvalued, to others who did not share the same information," the DoJ said.

"This indictment is an important victory for America's taxpayers who play by the rules and have no tolerance for those who make up their own rules, said Internal Revenue Service (IRS) special agent Reginael McDaniel.

A federal judge in Atlanta unsealed the indictment Friday against two former Integrity Bank executives, Douglas Ballard, 40, and Joseph Todd Foster, 42, and hotel developer Guy Mitchell, 50, of Coral Gables, Florida.

The charges of conspiracy, bribery, bank fraud and/or securities fraud could land Mitchell and Ballard in jail for up to 30 years and Foster for up to 20. Each charge also carries a potential fine of up to one million dollars.

The investigation was carried out by the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation and the IRS, as part of the Financial Fraud Enforcement Task Force.

Obama created the task force in November "to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes," the DoJ statement said.

"This investigation serves to remind us that there is no such thing as free money and there are no awards or incentives for creativity when it comes to crime," agent McDaniel said.

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