Tennessee man pleads guilty to conspiracy to defraud Cornerstone Community Bank in Dalton, GA
A Nashville man pleads guilty to conspiracy charges in a scheme to defraud a Dalton, Georgia bank.
In November 2004, Grady Wayne Fricks,65, contacted a senior vice president at Cornerstone Community Bank and stated that he needed an $850,000 loan to purchase property in Ringgold, Georgia. He did not reveal that he had already signed a contract to purchase the property for only $425,000. Fricks had done business with that senior vice president before at Cornerstone and at the bank where the employee had worked before joining Cornerstone. And Fricks had allowed the bank employee free use of his condominium at a beach in Florida several times.
The bank official violated Cornerstone's policies and procedures by not obtaining a copy of the sales contract between Fricks and the seller of the property to verify the contract price. The bank official also allowed Fricks to select an appraiser to appraise the property. Fricks paid the appraiser $1,000 to inflate the appraised value of the property so that Cornerstone would approve the $850,000 loan Fricks was seeking. In addition, Fricks gave the appraiser $100 in cash as a “tip.” The appraiser provided Fricks with a fraudulently inflated appraisal report, which stated that the market value of the property was $1,010,000.
In October 2006, Fricks again contacted the same bank official wanting to borrow more money against the property. Using the same appraiser as before, Fricks was able to obtain a loan on the property that was now reported to have a 40% higher appraisal. As a result of this new appraisal, Cornerstone released the additional collateral pledged by Fricks when the loan was originated in 2004, consisting of five real properties and the guaranty of Fricks Properties, a company owned by Fricks.
In November 2006, in reliance upon the false and misleading information and documents provided by Fricks and his unindicted co-conspirators, Cornerstone loaned Fricks an additional $177,000. Fricks did not repay the loans, and the bank foreclosed on the property.