Bonneville Phoenix Network
 KTAR News
 Arizona Sports
92.3 FM KTAR
Updated Jun 28, 2013 - 4:15 pm

Arizona executives sentenced in ND bank fraud case

FARGO, N.D. — Two executives from a defunct Arizona mortgage lender
received drastically different federal prison sentences Friday for swindling
North Dakota-based BNC National Bank out of at least $26 million at a time when
financial institutions were reeling from the national mortgage crisis.

Scott Powers and David McMaster pleaded guilty in October to conspiracy to
commit bank fraud and wire fraud. Powers was the CEO of American Mortgage
Specialists Inc., or AMS, and McMaster was the company’s vice president in
charge of lending operations.

In separate sentencing hearings in Bismarck, U.S. District Judge Daniel Hovland
gave McMaster 15 years and six months in prison, and Powers eight years. Several
employees from the bank were at the hearings.

Powers reportedly was given credit for cooperating with authorities. McMaster’s
lawyer said his client owned up to the charges and deserved better.

“I am hopeful that the BNC people have closure, but I am disappointed in the
sentence,” McMaster’s defense attorney James Belanger told The Associated
Press. “David McMaster took responsibility for his actions, agreed to plead
guilty, and knew that he would face a term in prison.”

The length of McMaster’s sentence undermines the concept of responsibility in
criminal cases and “underscores the irrationality” of federal sentencing
guidelines, Belanger said.

Powers’ attorney, Patrick Sampair, was not immediately available for comment.

Authorities say AMS defrauded the bank by providing it with false financial
statements and other information about the status of loans the bank had
financed. A printout obtained by a BNC employee in April 2010 showed that about
$565,000 of loans remained to be sold, rather than the approximately $27 million
of loans shown as being held for sale to investors.

Documents show that BNC’s holding company received about $20 million from the
federal Troubled Asset Relief Program, or TARP, in January 2009. About $18
million of that went to the bank. Investigators say BNC did not make its
required TARP dividend payments to the government between February 2010 and
December 2011.

At that point, BNC ceased funding the loans, and AMS shut its doors.

“Mr. McMaster and Mr. Powers stole $28 million from BNC banks, putting the
jobs of the people who work there at risk,” U.S. Attorney Timothy Purdon said.
“Further, because of the TARP payments BNC had received, they also put the
American taxpayer at risk.”

The plea agreements call for Powers and McMaster to pay back more than $28.5
million to the government and more than $28.5 million to the bank.

Two other people were indicted in the case. Lauretta Horton, former director of
accounting with AMC, and David Kaufman, an independent auditor, pleaded guilty
and were sentenced to probation. Horton was charged with conspiracy to commit
bank and wire fraud. Kaufman was charged with obstruction of justice.

BNS is based in Bismarck with offices in several states, including Arizona.
Bank CEO Gregory Cleveland did not return a phone message Friday.


comments powered by Disqus