Williams, the former CEO of Orion Bank in Naples, Florida, pled guilty in February to charges of conspiracy and lying to regulators. Williams allegedly orchestrated a scheme in 2009 to make Orion Bank appear to be in good health when it was actually undercapitalized, according to prosecutors. The bank ultimately failed, taking millions of dollars of shareholder money with it.
In the wake of the financial crisis, U.S. and international regulators have been pushing banks to maintain a bigger capital cushion. The U.S. Federal Reserve recently released its interpretation of Basel III -- an international pact that requires banks to maintain certain levels of capital -- which included even the smallest banks in the agreement.
As Orion was circling the drain in 2009, Williams reportedly loaned $80 million to Frank Mileto, an Orion customer, so that Mileto could then turn around and buy $15 million worth of company stock, thus making Orion seem stronger than it really was. Prosecutors say Williams didn't tell regulators about this maneuver -- perhaps understandably, since it was illegal.
According to the Sarasota Herald-Tribune, the prosecutors in Williams's case used more than 100 million pages of documents to make their case.
Like much of the rest of Florida, Naples -- a city of only about 20,000 people -- has been hard hit by the financial downturn. Besides Orion, at least three other Naples banks have failed since the onset of the recession -- Hillcrest Bank Florida; the Bank of Florida-Southwest; and Partners Bank, which in 2009 had the dubious distinction of being the 100th bank federal regulators shut down that year.
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