2 former executives of collapsed Ga. bank, developer charged in $80 million fraud case

2 former Ga. bank executives, developer charged

ATLANTA — One of Georgia’s largest bank failures has spawned fraud and bribery charges against a Florida developer and two of the bank’s former executives.

The federal charges, announced Friday, relate to more than $80 million in loans from Integrity Bank of Alpharetta, Ga., taken out by Guy Mitchell, 50, of Coral Gables, Fla.

Mitchell — the bank’s largest borrower — took out loans for hospital construction and renovation projects but used the bank’s money to buy an island and for other purposes, federal prosecutors say.

Mitchell turned himself in Friday and pleaded not guilty to 39 charges levied in a federal indictment.

Douglas Ballard, 40, and Joseph Todd Foster, 42, are former bank officials who were indicted as co-conspirators. They are expected to turn themselves in next week, federal prosecutors said.

Ballard was the bank official who worked with Mitchell on the loans. Foster was executive vice president of risk management.

Prosecutors said that with the help of Ballard and Foster, Mitchell paid interest on existing loans by drawing from other loans, borrowing more and more money to keep up with interest payments. They accused Ballard of arranging for loan money to go right to Mitchell’s personal checking account that was meant for a hospital construction and renovation project in California.

The indictment also alleges that Mitchell paid Ballard more than $230,000 over nine months as a reward for helping in the fraud. And it says Ballard and Foster engaged in illegal insider trading when they sold nearly all their shares of Integrity stock based on secret information about the problems associated with the loans to Mitchell.

The $1 billion Integrity Bank, founded in 2000, failed after suffering at least $235 million in federally insured losses. The $80 million in loans to Mitchell represent about a third of that, said U.S. Attorney Sally Quillian Yates.

“It was a substantial contributing factor to the bank’s collapse,” said Yates, of loans taken out during the years 2004 through 2007.

Mitchell’s lawyer said his client’s loans were proper. He attributed the bank’s failure to liberal lending policies and to a difficult economy.

“The losses to the bank were not the result of any improper conduct by Mr. Mitchell,” said attorney Edward Garland.

“He did not bribe any bank officer, nor did he engage in any illegal activity,” Garland also said of his client. He added that Mitchell and Foster have not even met.

Prosecutors said they didn’t know if Ballard and Foster had lawyers.

The white-haired, white-bearded Mitchell was escorted into court wearing handcuffs, an all-white aloha shirt and dark slacks. He was released on a $2.5 million bond, partially secured by a commercial property he owns in Atlanta and his residence in Florida.