Regulators should not have forced BestBank of Boulder to close, a defense attorney for one of three former bank executives charged with fraud said Wednesday. Before it collapsed in 1998, it was one of the best-performing financial institutions in the country, he said.
The government alleges that former bank executives conspired to hide delinquent accounts to fraudulently inflate revenue and enrich themselves with millions of dollars in bonuses.
During his opening statement in Denver federal court Wednesday, defense attorney Daniel Sears countered that “it was the regulators who were pulling the deception on the bankers.”
Sears represents former Best Bank chief financial officer Jack Grace.
He faces 95 counts of conspiracy, fraud and other charges, along with former bank chief executive Edward Mattar and former president Thom as Alan Boyd. Opening statements began Tuesday. The trial could last 10 weeks.
Rather than forcing the bank to close, Sears said, regulators should have taken a different path, such as asking the bank’s board of directors to deal with any regulatory concerns.
BestBank issued credit cards to subprime borrowers at 18 percent interest.
A federal prosecutor said during his opening remarks Tuesday that the bank had lax credit requirements and that four out of five of the bank’s accounts defaulted. The bank illegally “re-aged” the defaulted accounts, or made them current, so it could still book the revenue it would earn on interest.
However, Sears said Wednesday that 35 percent to 40 percent of the bank’s credit-card accounts were current. A 20 percent performance is considered “pretty good” in the subprime market, he said.
Staff writer Andy Vuong can be reached at 303-820-1209 or avuong@denverpost.com.
