From The Asheville Citizen-Times
The former president of the failed Bank of Asheville admitted in court Thursday that he made an illegal $500,000 loan in the name of a “straw borrower” substituted for the true borrower.
In addition to the count of bank fraud, Gordon “Buddy” Greenwood pleaded guilty in U.S. District Court to one count of money laundering.
Magistrate Judge Dennis Howell told Greenwood he faces a maximum of 40 years in prison and $1.25 million in fines. A date for sentencing has not been set.
Howell ruled that Greenwood can remain free pending sentencing.
Greenwood, 64, who retired as the bank's president and CEO last summer, declined to comment following the brief hearing. His attorney, Bradley Bannon, also declined comment.
Assistant U.S. Attorney Corey Ellis told the judge that as part of the plea arrangement, Greenwood agreed to cooperate with the government. The indictment against him states that he was aided by others in the bank fraud.
Ellis said he couldn't comment beyond statements made in court.
Federal and state regulators shut down the Bank of Asheville on Jan. 21, and its accounts and assets were taken over by Troy-based First Bank. The bank had reported large losses last year caused primarily by bad real estate loans.
Bank of Asheville sued Greenwood in November in state court, saying he had improperly allowed developer Keith Vinson to transfer $2 million from an account that was to be controlled jointly by Vinson and another developer. Vinson's projects have included the stalled Seven Falls development in Henderson County.
The indictment against Greenwood handed up by a federal grand jury Feb. 2 focuses on a loan made by the bank in March 2009. Afterward, according to the indictment, Greenwood “completed a series of financial transactions for the benefit of K.V., R.C., A.C., G.G. and the straw borrower, C.B.” It does not specify further who those beneficiaries were.
The indictment also alleged that Greenwood engaged in money laundering regarding a check of $40,000 drawn on funds derived from an illegal activity.
Loaning to a straw borrower damages a bank because it cannot accurately assess the risk involved in the loan, and the straw borrower may or may not even know his name was used in the transaction, the indictment states.
Greenwood had been prominent in local banking circles for years. He was appointed president of Bank of Asheville in January 2000.
He previously was senior market manager for Centura Bank and was one of three officers in the startup of First Commercial Bank, which later merged with Centura.
His late father, Gordon H. Greenwood, served as a Buncombe County commissioner and member of the state House.