A former Central Bank of Savannah CEO has pleaded guilty in a US federal court to charges related to frauds that sometimes relied on unauthorised approvals of letters of credit (L/Cs).

Central Bank is a small bank in the US state of Tennessee and currently has approximately US$100 million in assets and a total of 40 employees.

Criminal conspiracy

The former CEO, Christopher Brent Jerrolds, pleaded guilty to conspiracy to commit bank fraud in a federal court in Jackson.

The court heard that between 2009 and 2012, Jerrolds gave preferential treatment to Tennessee Materials Corporation (TMC) and, as a result of the criminal conspiracy, Central Bank, Wayne County Bank and First Metro Bank lost more than US$9 million.

Variety of frauds

Many of the former banker's frauds involved schemes to make TMC, which served as a vehicle for the fraudsters, appear more creditworthy than it really was.

In 2011 and 2012 however, Jerrolds issued L/Cs to TMC in the amount of US$2 million and US$1,783,000 and, among other things, concealed the L/C issuance from Central Bank.

No records

Jerrolds did not enter the L/Cs into the bank's books and records, and did not obtain approval from the board to issue the credits.

The former bank chief faces a sentence of up to five years imprisonment, a fine of not more than US$250,000 and a period of up to three years of supervised release.

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