PANAMA CITY — Three leaders of a pair of failed banks pleaded not guilty in federal court Aug. 8 to a 12-count indictment alleging they conspired to bilk the government out of nearly $4 million.
Attorneys for Terry Dubose, Elwood West and Frank Baker did the talking during their first court appearance since they were indicted last month.
Magistrate Larry Bodiford set their bonds at $25,000 each and outlined the conditions of their pretrial supervision: no guns, drugs or excessive alcohol use; no law violations; no travel outside the Northern District of Florida without written permission; no passports; and no contact between the alleged conspirators except to discuss legal strategies with their attorneys present.
Investigators worked for two years to build the case against Dubose, West and Baker, said Assistant U.S. Attorney Gayle Littleton, who will prosecute the case. She described the allegations against them as “a pretty simple fraud scheme.”
The men waived their right to a speedy trial. Bodiford set the case for trial in February, despite a push by Claire Rauscher, an attorney representing Dubose, to schedule it for April.
Rauscher expressed concerns about being able to thoroughly sift through the evidence against the bankers, which she expected to be voluminous due to the length of the investigation. She also anticipated that witnesses in the case would have difficulties with their travel and lodging accommodations if the trial is held during Spring Break.
Littleton pushed for the earlier trial date, arguing the April date falls during the heaviest period of Spring Break and there would be fewer spring breakers here in late February. The government, she said, is ready to try the case.
“To push this case to April is not necessary and would cause this case to linger,” she said.
Dubose was a director and chief executive officer for Coastal Community Holdings, which controlled Panama City Beach-based Coastal Community Bank, which included the former Apalachicola State Bank in Franklin County, and Port St. Joe-based Bayside Savings Bank. He also was its second largest shareholder.
West was chief financial officer and Baker, Coastal’s largest shareholder, was a director and an attorney.
The men put up their banks as collateral when they borrowed $3 million in 2007. A year later, the borrower was pressuring them to pay up when they conspired to defraud a Federal Deposit Insurance Corporation (FDIC) program designed to help banks get loans, federal prosecutors charge.
The FDIC was guaranteeing loans between banks provided the loans were not secured by collateral. The men falsely assured the FDIC that they had not put up collateral on the first loan to secure a second FDIC-guaranteed loan from CenterState Bank, which they then used to repay the initial loan and save their stock in the banks, the indictment says.
The FDIC took over Bayside Savings and Coastal Community in July 2010, and CenterState filed a claim for the FDIC to pay the $3.8 million they were owed, which the FDIC did.
Each of the men is charged with conspiracy to commit wire fraud against the FDIC and seven counts of wire fraud — the counts are each punishable by up to 30 years in prison — as well as three counts of making false statements to the FDIC and one count of aiding and abetting a false claim, each of which are punishable by up to five years in prison.
“We deny the charges,” Rauscher said. Dubose’s attorney declined further comment, citing court rules that prohibit attorneys from commenting publicly about pending cases.