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CommunityOne Bank Ordered to Repay $400K PDF Print
Written by Steve Frank   
Thursday, 24 May 2012 05:13

In the same criminal proceeding that saw Keith Franklin Simmons sentenced to 50 years in Federal Prison Wednesday, Judge Robert Conrad Jr. also released $400,000 to be paid by CommunityONE Bank as restitution to the victims of the Ponzi scheme that the bank failed to detect and report. In April 2011, CommunityONE Bank entered into a deferred prosecution agreement with the Department of Justice related to the Black Diamond Ponzi scheme.  The deferred prosecution agreement allowed the Bank, which had been critically undercapitalized, to undergo a merger and recapitalization thereby avoiding losses from a bank failure to innocent account holders and to the FDIC fund estimated at $500 million. At the time of the deferred prosecution agreement, the $400,000 figure represented sixteen percent (16%) of the bank’s total value. As part of the deferred prosecution agreement, CommunityONE Bank admitted to failing to maintain an effective anti-money laundering program which would have detected and reported Simmons’ suspicious transactions. Court documents show that from April 2007 until September 2009, Simmons deposited more than $35 million in investor funds into his CommunityONE Bank account and withdrew over the same time span more than $35 million from that same account. CommunityONE Bank did not file any Suspicious Activity Report (SAR) on Simmons during this time period, despite the hundreds of suspicious transactions that took place over those two and a half years. Under the Bank Secrecy Act, banks are required to establish, implement and maintain programs designed to detect and report suspicious activity indicative of money laundering and other financial crimes, such as investment fraud schemes.  According to court documents, the bank failed to detect and report the suspicious transactions, as required by the Bank Secrecy Act, due to deficiencies in its anti-money laundering program.

  
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