Bank chairman admits spending taxpayer's bailout cash on beachside holiday home
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Thursday 29 August 2013
A US banker is facing jail after using bailout funds to help his company buy a luxury condo in Florida.
When the US government unveiled its $700bn (£450bn) troubled asset relief programme (Tarp) in 2008, the money was supposed to be used buying up toxic mortgage securities on banks' balance sheets.
But Darryl Lane Woods, the former chairman and chief financial officer of Mainstreet Bank in Missouri, who this week pleaded guilty to misleading federal investigators, used part of the money released to help his bank purchase a luxury condo in Florida.
According to Christy Romero, the Special Inspector General for Tarp (Sigtarp), Woods used $381,000 of public funds to buy the condo in early 2009. The money was part of around $1m in Tarp funds released to Calvert Financial, Mainstreet's holding company. Woods was the chairman and majority shareholder of Calvert.
"The purpose of Tarp is to promote financial stability and lending in a time of national economic crisis, not to bankroll the purchase of luxury vacation properties for bank executives," Mr Romero said.
"When Sigtarp required Mainstreet Bank to disclose how it spent Tarp funds … Woods failed to tell the truth that within days of receiving the Tarp funds, the bank spent more than a third of the funds purchasing a waterfront condo in Florida for his and other executives' use."
Woods, 48, now faces a possible one-year jail term, a fine of up to $100,000 and a restitution order.
"When many other Americans were losing their homes, he was siphoning off public funds to buy a luxury vacation condo in Florida," Tammy Dickinson, the US attorney for the Western District of Missouri, said.
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