Virginia Man Sentenced in $41M Bank Fraud Suit

A Virginia man received a sentence of 14 years in federal prison for carrying out ""elaborate and sophisticated fraud schemes"" that took millions away from investors and the government, the ""Special Inspector General for the Troubled Asset Relief Program"":http://www.sigtarp.gov/ (SIGTARP) announced.

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George P. Hranowskyj of Chesapeake, Virginia, pled guilty in July to conspiracy to commit wire fraud and conspiracy to commit bank fraud.

According to court records, from January 2008 through August 2011, Hranowskyj and his business partner, Eric H. Menden, performed favors for insiders at the Bank of the Commonwealth in exchange for preferential lending treatment. They also assisted insiders in concealing the extent of the bank's non-performing assets by purchasing bank-owned property.

When the bank failed in September 2011, Hranowskyj and Menden guaranteed approximately $41 million in loans for the bank. Most of those loans were on an interest-only basis, and the two were regularly allowed to overdraw their accounts. Court records show Hranowskyj obtained loans by sending an email to a bank insider asking for money.

The relationship between Hranowskyj, Menden, and bank insiders prompted employees to refer to the institution as ""the Bank of Eric and George.""

""Hranowskyj treated this bank like he owned it, calling himself ├â┬ó├óÔÇÜ┬¼├ï┼ôBig Daddy' to bank employees, overdrawing his accounts by $600,000, and demanding that the bank ├â┬ó├óÔÇÜ┬¼├ï┼ôlower his rates ASAP' and cash his employees' paychecks even though his account was in the red,"" said Special Inspector General Christy Romero.

In addition to his fraudulent activities at the Bank of the Commonwealth, Hranowskyj was sentenced for a separate scheme aimed at profiting illegally from historic rehabilitation tax credits. Hranowskyj and Menden falsified invoices for large construction projects, using them to apply for federal and state historic tax credits. The credits were sold to investors who wanted to reduce their own tax liability.

In total, investors paid the men approximately $8.7 million for illegitimate tax credits, causing a loss of $6.2 million to the United States and a loss of $6.3 million to Virginia.

""Mr. Hranowskyj's agreement to perform personal and professional favors for bank insiders in exchange for unfettered access to millions of dollars in credit exposes the ugly underbelly of how certain insiders treated the Bank of the Commonwealth as their personal piggy bank,"" said U.S. Attorney ""Neil MacBride"":http://www.justice.gov/usao/vae/meetattorney.html. ""His sentence of 14 years in prison sends a strong and unequivocal message that white collar criminals will be held accountable for the often devastating impact of their crimes on our communities.""

Menden pled guilty for his role in the schemes in April and was sentenced to 11 1/2 years in prison.