Ex-Bank President and Developer Both Charged With Mortgage Fraud

A former bank president and real estate developer were charged in a one count bill of information for conspiracy to commit mortgage bank fraud.

The case, which is being investigated by agents from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the FBI, involves Reginald Harper, 58, former president and CEO of First Community Bank in Hammond, Louisiana, and Troy A. Fouquet, 43, developer based in Covington, Louisiana.

Both men were charged February 16 for their roles in a scheme involving the cover up of delinquent loans in place of “sham” loans.

“Rather than recognize losses on bad loans, Harper and Fouquet concocted a scheme to create and use sham loans to hide delinquent, non-performing loans,” said Christy

Romero, deputy special inspector general for SIGTARP. “Instead of living up to his fiduciary duties as president and CEO of the bank, Harper concealed the true status of the loans from the bank, regulators, and the U.S. Department of Treasury in the bank’s TARP application.”

In about 2004, Harper loaned Fouquet more than $2 million to purchase parcels of land, develop them into subdivisions, and then build homes on them to be bought by home buyers, according to court documents.

In 2005, it became difficult for Harper and Fouquet to find qualified buyers. To avoid reporting delinquency on loans made by Harper, the two developed various cover-up methods instead, according to the bill of information.

According to the bill of information, one scheme involved Harper making it appear to mortgage lenders that the prospective home buyers had more money than they did and another involved the use of “nominee” loans or “straw” borrowers to take out loans from First Community Bank, according to court documents. Nominee loans and straw buyers refers to a form of fraud involving the concealing of a borrower’s identity in place of a nominee’s name and credit history to take out a loan. Harper also accepted insufficient checks from Fouquet, crediting the loan payment in First Community Banks’s books and records, according to a release.

If Harper and Fouquet are convicted, the maximum penalty they face is up to five years in prison, a $250,000 fine, and a $100 special assessment, according to a release

By: Esther Cho