Banker Admits Role in $1 Billion Crash

     SAN DIEGO (CN) – La Jolla Bank cost taxpayers $1 billion when it collapsed in 2010, and the head of a lending department on Friday admitted she took bribes to issue bad loans that helped kill it.
     Amalia Martinez, head of Small Business Administration lending at the bank, admitted that she and other senior executives took cash bribes and kickbacks to issue hundreds of millions of dollars in loans to borrowers who did not qualify for and were unlikely to repay them.
     Martinez, 51, of San Diego, faces up to 5 years in federal prison for conspiracy to misapply bank funds at her Nov. 30 sentencing.
     Martinez told the court the conspiracy began in 2004, when she and other top dogs at La Jolla Bank agreed to give loans to people they called “Friends of the Bank,” or “FOBs.” When the “Friends” defaulted they issued more bad loans to cover the missing payments, covering up the bank’s bad performance and qualifying themselves for more compensation, the U.S. Attorney’s Office said.
     Martinez admitted the conspirators took at least $400,000 in cash and juggled the books and destroyed fraudulent documents to deceive auditors and regulators.
     She admitted arranging more than $55 million in Small Business Administration-backed loans as part of the conspiracy, $20 million of which were lost to default.
     The FDIC took over the bank in February 2010, and its debt of more than $1 billion was passed along to taxpayers.
     La Jolla Bank loan broker Jocelyn Brown has been charged with bank bribery and conspiracy to commit bribery: paying bribes to Martinez and others to help arrange loans. Brown, 59, of San Diego, was arrested on Aug. 7 and awaits trial. She faces up to 35 years in federal prison if convicted.
     A borrower, Annand Sliuman, 34, of Spring Valley, has pleaded guilty to bribing Martinez to get loans. He faces up to 30 years. His assistant, Laura Ortuondo, who helped prepare the fraudulent loan documents, pleaded guilty to making false statement and destroying evidence. Ortuondo, 34, of Cupertino, faces up to 5 years.

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