INFORUM.com | WDAZ.com

WDAY: The News Leader

Published October 19, 2012, 08:46 AM

Arizona pair due in North Dakota court on bank fraud charges

FARGO, N.D. (AP) — Two executives from a defunct Arizona mortgage lender were due in a North Dakota federal court on Friday to hear charges against them alleging that they swindled Bismarck-based BNC National Bank out of at least $26 million.

By: DAVE KOLPACK,Associated Press, Associated Press

FARGO, N.D. (AP) — Two executives from a defunct Arizona mortgage lender were due in a North Dakota federal court on Friday to hear charges against them alleging that they swindled Bismarck-based BNC National Bank out of at least $26 million.

Scott Powers and David McMaster are charged with conspiracy to commit bank fraud and wire fraud, and court records indicated they might enter pleas during the hearing. Powers was the CEO of American Mortgage Specialists Inc., or AMS, and McMaster was the company's vice president in charge of lending operations.

Authorities say AMS defrauded BNC by providing it with false financial statements and other information about the status of loans the bank had financed. A printout obtained by a BNC employee in April 2010 showed that few loans at AMS remained to be sold, according to court documents.

"The printout revealed that approximately $565,000 of loans remained to be sold, rather than the approximately $27 million of loans which were shown in BNC records as being held for sale to investors," a federal affidavit reads. "BNC ceased funding the loans, and AMS closed its operations."

McMaster's lawyer, James Belanger, said he is "one of the most decent clients" he has ever represented.

"He made mistakes and he is accepting responsibility for them. He has never sought to do otherwise," Belanger said in a statement. "Frankly, it is a privilege to be his lawyer."

Powers' attorney, Patrick Sampair, was not immediately available for comment.

Documents show that BNC's holding company received about $20 million from the federal Troubled Asset Relief Program, or TARP, in January 2009. About $17 million of that went to the bank. Investigators say BNC did not make its required TARP dividend payments to the government between February 2010 and December 2011.

Tags: