ORIGINAL UNITED STATES OF AMERICA v. ADAM TEAGUE Case 2:12-cr-00008-RWS Document 1 Filed 08/22/12 Page 1 of 7 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA FILED IN CLERK'S OFFICE U.S.D.C. -Gainesville AUG 22 2012 E JAtiMH N.~ EN Clerk GAINESVILLE DIVISION By: ' CRIMINAL INFORMATION NO. 2:12-CR-8 ~'erk q-j THE UNITED STATES ATTORNEY CHARGES THAT: 18 U.S.C. 1349 CONSPIRACY TO COMMIT BANK FRAUD 1. From in or about March 2007 through at least in or about December 2009, the exact dates being unknown to the United States Attorney, in the Northern District of Georgia and elsewhere, the defendant, ADAM TEAGUE, knowingly combined, conspired, confederated, agreed, and had a tacit understanding with T.N., M.L., and B.H., and with other persons known and unknown to the United States Attorney, to commit bank fraud, by knowingly executing and attempting to execute a scheme and artifice to defraud Appalachian community Bank ("Appalachian" or "the bank"), and to obtain money, funds I credits I assets I securities, and other property owned by and under the custody and control of Appalachian, by means of materially false and fraudulent pretenses, representations, and promises, and by the omission of material facts, in violation of Title 18, United States Code, Section 1344. 2. The objects of the conspiracy were for defendant TEAGUE and his unindicted coconspirators to unjustly enrich themselves at the expense of Appalachian and to prevent the FDIC from discovering certain past-due loans on Appalachian's books.
Case 2:12-cr-00008-RWS Document 1 Filed 08/22/12 Page 2 of 7 3. It was a part of the conspiracy that, at all times material to this Information: a. Appalachian was a financial institution as defined in Title 18, United States Code, Section 20, and its deposits were insured by the Federal Deposit Insurance Corporation ("FDIC"). b. Defendant TEAGUE was employed by Appalachian as senior vice-president. 4. Appalachian was a member of the Federal Home Loan Bank of Atlanta ("FHLBank Atlanta"), one of 12 regional banks established by Congress to support mortgage lending. Appalachian received funding from FHLBank Atlanta in the form of loan a.dvances, and Appalachian pledged portfolios of its loans to FHLBEmk Atlanta as collateral for those advances. 5. The United States Treasury Department's Troubled Asset Relief Program ("TARP") was created by the Emergency Economic Stabilization Act of 2008 and was designed to restore liquidity and stability to the financial system in the wake of the financial crisis. One of the sub-programs created under TARP was the Capital Purchase Program ("CPP"), in which government funds would be invested in financial institutions in exchange for preferred shares in those institutions. Financial institutions seeking TARP funds under CPP would apply through their primary federal bank regulator, and both an institution's eligibility and the amount of the CPP investment would depend, in part, upon information reflected in the institution's financial statements. 6. On or about October 29, 2008, unindicted coconspirator T.N. submitted and caused to be submitted to the FDIC on behalf of Appalachian an application seeking $27 million in TARP funding under the CPP program.
Case 2:12-cr-00008-RWS Document 1 Filed 08/22/12 Page 3 of 7 7. Due to its poor financial condition, Appalachian was forced to close on March 19, 2010, and the FDIC was appointed as receiver. At that time, Appalachian owed FHLBank Atlanta approximately $67 million. Fraudulent Transactions Designed to Hide Bad Debts from the FDIC 8. From in or about June 2008 through in or about August 2009, in an attempt to prevent the FDIC from discovering certain past-due loans on Appalachian's books, defendant TEAGUE and unindicted coconspirator T. N. arranged a number of sham real estate transactions and caused Appalachian to make approximately $7 million in bogus loans to unindicted coconspirator M.L. in an effort to make it appear that M.L. had purchased certain properties from Appalachian's foreclosure inventory and was making regular monthly payments on the new mortgages. Fraudulent Transactions Involving Panama City Beach Condominiums 9. In or about April 2009, defendant TEAGUE and unindicted coconspirator T.N. used shell corporations to purchase two condominiums in Panama City Beach, Florida, which they caused Appalachian to finance at a total cost of approximately $566,000. Approximately two months later, defendant TEAGUE and unindicted coconspirator T.N. refinanced their mortgages and pocketed more than $875,000, which they then used to pay other personal debts, make monthly loan payments on the refinanced mortgages, pay condominium fees, and purchase new furniture for their condominiums. The new loan issued to defendant TEAGUE was pledged to FHLBank Atlanta. Fraudulent Transactions Designed to Hide Bad Debts from the FDIC 10. In or about August 2009, defendant TEAGUE and unindicted coconspirator T.N. created two shell companies, GPH Investments, LLC and
Case 2:12-cr-00008-RWS Document 1 Filed 08/22/12 Page 4 of 7 PHL Investments, LLC. GPH is an acronym for "God Please Help," and PHL is an acronym for "Please Help Lord." 11. Defendant TEAGUE and unindicted co-conspirator T. N. then engaged in a sham real estate transaction designed to make it appear that GPH had purchased 11 residential properties from Appalachian's foreclosure inventory for a total of approximately $3.7 million. 12. Defendant TEAGUE and unindicted coconspirator T.N. caused Appalachian to loan GPH 90% of the purchase price and caused GPH to represent at closing that GPH was paying the other 10% of the purchase price out of its own funds, even though defendant TEAGUE and unindicted coconspirator T.N. knew that to be untrue. 13. In truth, the 10% down payment, closing costs, and monthly interest payments on this loan were all paid out of the proceeds from a $500,000 line of credit that defendant TEAGUE and unindicted coconspirator T.N. fraudulently caused Appalachian to extend to PHL. Fraudulent Transactions Involving Soak Creek 14. At all times relevant to this Information, defendant TEAGUE and three other individuals owned Soak Creek Preserve Partners, LLC ("Soak Creek"), a Georgia limited liability company formed for the sole purpose of engaging in land flips, that is, buying real estate and immediately reselling it at a higher price. 15. Specifically, Soak Creek was formed to purchase and resell two adjoining tracts of land in Tennessee, one tract consisting of approximately 5, 043 acres and the other tract consisting of approximately 2,160 acres. Before Soak Creek purchased either tract, defendant TEAGUE and his partners made arrangements to resell both tracts to an investment group from Texas.
Case 2:12-cr-00008-RWS Document 1 Filed 08/22/12 Page 5 of 7 16. Between on or about March 7, 2007 and on or about September 4, 2007, defendant TEAGUE caused Appalachian to make three separate $100,000 loans to unindicted coconspirator B.H. under false pretenses. Defendant TEAGUE knew that B.H. was a silent partner in Soak Creek. Defendant TEAGUE also knew that, in obtaining these loans from Appalachian, B.H. was acting as a straw borrower for Soak Creek. And defendant TEAGUE knew that Soak Creek intended to use the proceeds of these loans as down payments on the 5,043 acres and the 2,160 acres. not disclose any of these facts to Appalachian. Defendant TEAGUE did In fact, defendant TEAGUE actively hid his involvement in at least one of these loan transactions by altering Appalachian's records to make it appear that someone else had acted as the loan officer. 17. By not disclosing to Appalachian's loan committee that he had a personal financial interest in these transactions, defendant TEAGUE violated the bank's conflict-of-interest policy. 18. On or about April 20, 2007, in order to finance Soak Creek's purchase of the 5,043 acres, defendant TEAGUE caused Appalachian to wire transfer approximately $7.2 million of the bank's money to the escrow account of the Tennessee law firm that handled the loan closing. Defendant TEAGUE did not record this wire transfer in Appalachian's books and records. At the time of this transfer, Soak Creek's account at Appalachian had a zero balance. Therefore, this wire transfer caused Soak Creek's account to be overdrawn by approximately $7.2 million. The amount of this overdraft exceeded defendant TEAGUE'S lending authority at the bank.
Case 2:12-cr-00008-RWS Document 1 Filed 08/22/12 Page 6 of 7 19. On or about April 24, 2007, Soak Creek flipped the 5,043 acres to the Texas investment group for approximately $9.3 million, thereby realizing a same day profit of approximately $2 million. 20. On or about September 28, 2007, in order to finance Soak Creek's purchase of the 2,160 acres, defendant TEAGUE caused Appalachian to wire transfer approximately $3 million of the bank's money to the escrow account of the Tennessee law firm that handled the loan closing. Defendant TEAGUE did not record this wire transfer in Appalachian's books and records. At the time of this wire transfer, there was only $4.00 in Soak Creek's account at Appalachian. Therefore, this wire transfer caused Soak Creek's account to be overdrawn by approximately $3 million. The amount of this overdraft exceeded defendant TEAGUE'S lending authority at the bank. 21. On or about September 28, 2007, Soak Creek flipped the 2,160 acres to the Texas investment group for approximately $3.7 million, thereby realizing a same-day profit of approximately $500,000. All in violation of Title 18, United States Code, Section 1349. FORFEITURE PROVISION Upon conviction of the offense alleged in this Information, the defendant shall forfeit to the united States, pursuant to 18 U.S.C. 982 (al (2) (Al, any property constituting or derived from proceeds obtained directly or indirectly as a result of said violation, including, but not limited to, the following: A. MONEY JUDGMENT: (1) A sum of money in United States Currency, representing the amount of proceeds obtained as a result of the offense.
Case 2:12-cr-00008-RWS Document 1 Filed 08/22/12 Page 7 of 7 B. REAL PROPERTY: (1) 610 Clear Creek Valley Drive, Ellijay, Gilmer County, Georgia, and all buildings, appurtenances, improvements, and attachments thereon. If, as a result of any act or omission of the defendant, such property cannot be located upon the exercise of due diligence; has been transferred or sold to, or deposited with, a third partyi has been placed beyond the jurisdiction of the court; has been substantially diminished in value; or has been commingled with other property which cannot be divided without difficultyi it is the intent of the united States, pursuant to 21 U.S.C. 853(p), as incorporated by 18 U.S.C. 982(b), to seek forfeiture of any other property of said defendant up to the value of the forfeitable property described above. All pursuant to 18 U.S.C. 982(a) (2) (A) and (b). ASSISTANT UNITED STATES ATTORNEY eo ~;;:;YT)j;:~6335 ~ I W~OH ~~ED f10wn ASS STANT STATES ATTORNEY Georgia Ba;r~~mber 064437 600 United States Courthouse 75 Spring Street, SW Atlanta, GA 30303 (404) 581-6000