A judge has found three former bank executives guilty of conspiracy, fraud and false reporting in the $200 million failure of BestBank of Boulder in 1998.
Edward Mattar, Thomas Boyd and Jack Grace face sentences of up to 30 years in prison and fines of as much as $14 million each. They and two others convicted last year also could $100 million in restitution.
Following a lengthy trial during which the jury was dismissed after an attorney became seriously ill, U.S. District Judge Richard Matsch found the men guilty of 15 criminal counts including conspiracy, bank fraud, false bank reports and wire fraud. Matsch found them not guilty on 70 counts including many of the fraud charges, bribery and money laundering.
Prosecutors called the verdicts a complete victory, but defense attorneys said there may be room for some leniency in sentencing because Mattar, Boyd and Grace were found to have become involved in the fraud only near the end.
Regulators declared BestBank insolvent in July 1998 and closed the bank, even as Colorado’s economy was booming.
It was the first bank default in the state in five years and one of the largest in the U.S. for a decade. It lost more than $200 million, much of which was picked up by the FDIC. Large depositors lost $27 million.
Prosecutors alleged that from 1994 through July 1998, the bankers engaged in a business operation that made more than 500,000 BestBank credit card loans to subprime borrowers. In July of 1998, the Colorado State Banking Commissioner and the FDIC determined that the value of the subprime credit card loans maintained as an asset on the books of BestBank was overstated because delinquent loans were fraudulently made to appear non-delinquent. BestBank’s liability to its depositors exceeded the value of its other assets, making it insolvent.
Mattar, 67, Boyd, 54, and Grace, 54, could not be reached for comment. They reside in the Denver area.
