Out of the Dark
No City Felt The Effects Of The Bank Of The Commonwealth Scandal As Much As Norfolk. But A Few Developers Are Investing In The Buildings Left To Die, Bringing Many Downtown Properties Back To Life
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In March of 2012, BoC executives, including president and CEO Edward Woodard, and Executive Vice President Stephen Fields, were indicted by a federal grand jury and sentenced to time at Fort Dix Correctional Institution in New Jersey. The CEO’s son, T. Brandon Woodard, a BoC executive, was also incarcerated. Local developers Eric Menden, George Hranowskyj, Tommy Arney and Dwight Etheridge were found guilty as well. This bunch’s collective deals, Federal regulators argued, led to the largest bank collapse in Virginia since the 2008 financial crisis.
In the case of Arney, the fraud was downright brazen. Regulators warned the BoC to cease loaning to the developer—who was actually given office space in the now-closed bank’s former Boush Street branch—but executives continued to green light millions in loans to him nevertheless.
Some of Arney’s plans for his properties raised eyebrows from Norfolk city hall and from the community at large. One building, at 2512 Granby, was being readied as a home base for a local chapter of the Hell’s Angels motorcycle club before the city shut it down. Another, at 251 Granby, was slated to be a go-go club. It was recently purchased by the Ciniva Web Agency, an internet design company, which will use part of the historic three-story building as its headquarters with plans to rent out the bottom floor to another business.
“The Bank of the Commonwealth’s high-risk lending practices resulted in soaring losses,” U.S. Attorney Neil MacBride said in a statement when the indictments were handed out. “For more than 30 years, this community put their trust—and their money—in the Bank of the Commonwealth. These charges portray a Bank leadership that betrayed that trust for their own profit at the detriment to their own Bank, its shareholders and the community it served.”
The BoC’s Woodard and Fields used scheme after scheme to conceal past-due loans and remove foreclosed property from the bank’s books, according to General Romero, special inspector for the federal government’s Troubled Asset Relief Program (TARP), in 2012. “Friends of the bank received sweetheart deals in return for helping mask the bank’s true financial position. And bank insiders personally benefited. This type of fraud contributed to the economic crisis and left Tidewater citizens, who depended on this TARP applicant bank, to deal with the bank’s collapse.”
Ironically, it was the bank’s application to seek bailout money from the government that eventually tripped it up. “BoC [applied] for $28 million in TARP funds in November of 2008, which is what triggered the fraud investigation by the Treasury,” says Dr. Larry “Chip” Filer, associate professor of Economics at Old Dominion University. “That’s the real ‘sexiness’ of this case. From a fraud standpoint, it was your average bad banker fraud. But the fact that they wanted to use this bailout money that was supposed to help save the banking system to perpetuate the fraud, that’s what puts this in the realm of a soap opera.”
Whether it happens on Wall Street or Granby Street, it’s still fraud, special inspector Romero had stated. And to this day, many properties across Coastal Virginia, and especially in Norfolk, are still feeling the after-effects of these bad dealings.
Following the guilty verdicts, Southern Bank and Trust entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) to take over most of the Bank of the Commonwealth’s properties, liabilities and assets. “We acquired these properties from the FDIC because they shut down the former bank and we bid on the assets,” Harrell says. “They sold the assets to us, which includes these properties plus pretty much all of the loans that the Bank of the Commonwealth had on their books.”