Bank CFO Faces TARP Conspiracy Charges | Courthouse News Service
Tuesday, November 28, 2023
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Bank CFO Faces TARP Conspiracy Charges

SAN FRANCISCO (CN) - The CFO of the failed United Commercial Bank lied about what happened after the bank got $297 million in taxpayer bailout money, according to a federal information.

United Commercial Bank failed in November 2009 - the 120th bank failure that year, during the Great Recession. It was acquired by the East West Bank of Pasadena.

Craig S. On was its chief financial officer from October 2008 through November 2009, according to the Oct. 30 information. It accuses him of conspiracy to make a materially false and misleading statement to an accountant, and seeks forfeiture of fraud proceeds.

The bank's loan portfolio increased from $4.4 billion in 2004 to more than $8 billion in 2007, but the loan portfolio "faced growing losses" by September 2008, according to the information.

The United States created the Troubled Asset Relief Program on Oct. 3, 2008, and on Nov. 14, 2008 TARP loaned $297 million to the bank.

In 2009, prosecutors say, On and other bank executives "engaged in conspiracy to deceive the bank's auditor by manipulating the bank's books and records in a manner that, as On well knew, misrepresented and concealed the bank's true financial condition and performance."

The conspiracy's objectives were to mislead auditors and conceal the "number and financial magnitude" of bad loans and conceal the bank's "true losses," according to the information.

On and other bank officials falsified financial statements, concealed facts from the bank's accountant and issued "false and misleading public statements and reports" on the bank's financial condition, according to prosecutors. Specifically, the U.S. attorney says in the information, they "fraudulently under-reported the bank's loan-loss allowance in a material amount."

The United States seeks forfeiture of any property On derived from lying to the accountant and any other valuable property that equals or exceeds the amount gained from conspiring to lie about the bank's finances.

United Commercial Bank senior vice president Thomas Yu this month pleaded guilty to a similar federal conspiracy charge and faces up to five years in prison.

United Commercial Bank was founded in 1974 and based in San Francisco. It did business in the United States, China and Taiwan before it was taken over by the Federal Deposit Insurance Corporation.

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