PANAMA CITY — Leaders of a failed Panama City Beach-based bank who lied to get more than $3.8 million of federal taxpayer money — intended to keep the economy from tanking in the midst of a downward spiral — have been sentenced to prison and ordered to pay the money back.
Donald Terry Dubose, president and CEO of Coastal Community Investments, and Frank Baker, lawyer for the company, were sentenced Thursday to four years and Elwood “Woody” West, chief financial officer of the company, was sentenced to three years. All three will serve their time in a minimum security prison for white-collar criminals. Jointly, the trio will repay about $4.54 million in restitution to the Federal Deposit Insurance Corp. (FDIC) for a 2008 fraud scheme.
Each of the men received about half the prison time normal fraudsters receive as dictated by 1984 federal sentencing guidelines.
“This offense was a marked deviation from an otherwise law-abiding life,” said Judge Richard Smoak after each man’s sentencing.
Attorneys of the three Coastal Community Investments bankers, a holding company that owned Panama City Beach-based Coastal Community Bank and Port St. Joe-based Bayside Savings, attempted to have the case acquitted and retried after jurors found them guilty in May on several counts of defrauding an FDIC program in 2008. The program, as described by prosecutors, was intended to rapidly pump
“If all the borrowers did what these borrowers did, there would have been a complete collapse,” said Assistant U.S. Attorney Gayle Littleton.
Coastal itself collapsed months after accepting the loan without repayment.
During the nearly eight-hour sentencing hearing in a filled courtroom, defense attorneys attempted to convince Smoak that the $3.8 million lost to Costal Community was actually the FDIC’s fault.
Dubose’s attorney likened it to a case where an oil tanker came loose from a barge and ran aground, spilling large amounts of oil — an unfortunate analogy for residents along the Gulf Coast. Exxon sued the company hauling the tanker and won.
“You know what the court found?” said lawyer John Despriet. “The captain was an idiot. … The FDIC caused its own loss because it is lazy and stupid.”
Smoak dismissed several enhancements to crimes to which a jury had already convicted the three, including obstruction of justice and abuse of trust. He agreed the men used sophisticated means and skills to attain the money.
“That required some considerable finesse to pull off,” Smoak said. “A slip of the tongue could have caused it to scuttle off.”
Each of the men also was sentenced to three years probation after their prison stays. Attorneys for the men said they will be appealing the court’s findings. Each will contribute to repaying $3.8 million for the loan and $731,565 in interest since 2010 to the FDIC program.
Despite not receiving the eight to nine years of prison sought, prosecutors said they were confident the conviction and sentencing of the bankers would send a message to others.
“What we had was three people who had all the benefits this world had to offer and yet they decided to steal from the federal government,”
An earlier version of this story is posted below:
PANAMA CITY — Three former bankers were sentenced Thursday to years in prison and millions in fines in connection to their running of the now defunct Coastal Community Bank.
Earlier this year, defendant Terry Dubose was convicted of all 12 counts brought against him by federal prosecutors, according to officials at the U.S. Federal District Court. Those counts included wire fraud, making false statements and conspiracy. Frank Baker was found guilty of counts 1, 3, 4, 7, 8, 9, 11 and 12 and not guilty on the other counts. Elwood West was found guilty of every count except count one.
On Thursday, Dubose and Baker were sentenced to four years in prison each. West was sentenced to three years. Jointly they will pay the FDIC $4.54 million. They were allowed to stay out of jail until Oct. 1, when they are to surrender.
The three men were executives or directors of Coastal Community Holdings, which owned Coastal Community Bank and Bayside Savings until the banks failed in 2010. They were accused of misrepresenting their eligibility for a loan guarantee under a hastily created FDIC program designed to stabilize financial institutions by ensuring access to credit.