NEW ORLEANS–Credit unions aren’t alone in being victimized by some enormous embezzlements, as one man has been charged with stealing $123-million from First NBC Bank in New Orleans. The theft ultimately led to the bank’s failure.
According to New Orleans U.S. Attorney’s Office, Gary R. Gibbs, 66, of Niceville, Fla., has been charged in a complex scheme that alleges Gibbs, along with former executives of the failed bank, from 2010-17 repeatedly arranged loans with the bank that were not repaid, and then allegedly obtained new loans from the bank to pay for those he already had with the full knowledge of executives with NBC Bank.
The U.S. Attorney said Gibbs ultimately told the bank he either could not or would not repay any of the loans.
“When Gibbs told Bank President A and Bank Officer C that he was considering filing bankruptcy or not paying his loans, Bank President A told Gibbs that First NBC Bank could not afford for Gibbs to default on the loans,” the U.S. Attorney said. “After that, Bank President A and Bank Officer C continued to make false statements and material omissions in loan documents to hide from the board, auditors, and examiners that the purpose of the new loans was to keep Gibbs and his entities from defaulting and that, in reality, Gibbs was not able to make his payments to the bank without receiving proceeds from new loans.”
Prosecutors further allege neither Bank President A nor Bank Officer C ever disclosed to the bank’s board, auditors, or examiners that Gibbs was considering defaulting on his loans or filing bankruptcy, “because that would have revealed that Gibbs did not generate enough cash to pay his loans.”
Additional Allegations
Prosecutors also allege the bank’s executives allegedly instructed Gibbs to inflate financial statements provided to the bank to hide the scheme by “falsely increasing the income of Gibbs’ entities to hide the amount of money those entities were losing.” The bank officials also, according to prosecutors, did not tell the bank’s board, auditors or examiners about those directions.
“By the time First NBC Bank failed in April of 2017, Gibbs and his entities owed the bank over $123 million,” prosecutors alleged.
Gibbs faces a maximum 30 years in prison; a fine of $250,000, or the greater of twice the gain to Gibbs or twice the loss to any victim; up to five years of supervised release; and a $100 mandatory special assessment.