Developer Pleads Guilty to Massive Fraud Scheme

A developer and restaurateur from Virginia pled guilty Friday for his role in a massive bank fraud scheme that contributed to the collapse of Bank of the Commonwealth, ""SIGTARP"":http://www.sigtarp.gov/Pages/home.aspx and federal officials announced Monday in a statement.

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Thomas E. Arney, 56, of Chesapeake, Virginia pled guilty to conspiracy to commit bank fraud, unlawful monetary transactions, and making false statements, according to the statement.

Arney faces sentencing on December 3, 2012 and could receive a maximum penalty of 20 years ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô five years each for the conspiracy and false statement counts and 10 years for the unlawful monetary transactions count.

According to the statement, Arney admitted to performing certain favors for insiders at the failed bank in exchange for preferential lending. He also admitted to assisting insiders with hiding the financial state of the bank by purchasing bank-owned properties.

The bank was shut down by regulators in September 2011, and according to the FDIC, the cost of the failure is estimated to be $268.3 million. According to the statement, the bank lost nearly $115 million from 2008 to the day it ceased operations.