Former CEO of the Bank of the Commonwealth Sentenced to 23 Years in Prison for Massive Fraud

NORFOLK, VA—Edward J. Woodard, 70, of Norfolk, Virginia, was sentenced today to 23 years in prison, followed by five years of supervised release, for conspiracy to commit bank fraud, false entry in a bank record, unlawful participation in loans, false statements to a financial institution, misapplication of bank funds, and bank fraud. The court further ordered Woodard to pay $333,569,732.00 in restitution to the Federal Deposit Insurance Corporation. A jury found Woodard guilty after a lengthy, 10-week jury trial on May 24, 2013. Evidence presented at trial demonstrated that Woodard, the former chief executive officer and chairman of the Board for the Former Bank of the Commonwealth (“bank”), engaged in an illegal reciprocal relationship with certain troubled borrowers to mask the Bank’s deteriorating financial condition. Conspirators Thomas E. Arney, Eric H. Menden, and George P. Hranowskyj all testified at trial that, at the request of Woodard and Executive Vice President Stephen G. Fields, they performed favors such as buying Bank of the Currituck stock, bailing out Woodard’s son on bad investments, and purchasing bank-owned property with fully-funded Bank of the Commonwealth loans. In return, Arney, Menden, and Hranowskyj all received preferential treatment, such as affording large overdrafts, sometimes for hundreds of thousands of dollars, below-market interest rates, loans to make interest payments on other loans, and easy access to credit. Additionally, Woodard funded three loans totaling $11 million without the approval of the Board of Directors to another troubled borrower who was in bankruptcy and the subject of a federal grand jury investigation. Later, Woodard made false entries in bank records to cover-up the fact that he authorized the funding of these loans without proper approval. Throughout the conspiracy, Woodard enriched himself and his son at the bank’s expense. Despite the fact that Arney had not made loan payments in over a year, Woodard nevertheless arranged for Arney to purchase his personal condominium at an inflated price using 100 percent financing from the bank and made $56,000. Woodard also ensured that Menden and Hranowskyj purchased his son’s failed investment properties and personal condominium with bank funds earning his son more than $69,000. Finally, Woodard also caused the bank to pay approximately $100,000 for renovations to his son’s personal residence, thousands of dollars in fraudulent commissions owed and his son’s personal legal fees. In addition to having a substantial impact on property values in the Hampton Roads area, Woodard’s crimes were a significant factor in the failure of the Bank of the Commonwealth on September 23, 2011. As a result of this failure, the FDIC has sustained at least $333 million in losses.