KANSAS CITY, Kan. – Through an elaborate scheme of check kiting and deceit, a Leavenworth business woman allegedly defrauded Farmers Bank and Trust’s Overland Park branch and other individuals, according to a federal indictment filed Aug. 6 in Kansas City.
Brenda Wood, 45, was indicted on five counts of bank fraud, one count of theft from an employee benefit program, and four counts of willful violations of the Employee Retirement Income Security Act, U.S. Attorney Barry Grissom said.
Her former business associate, Michael Yancey, also named in the indictment as a conspirator, pleaded guilty in June to charges of false statements on a loan application and faces five years in prison. Yancey was Wood’s loan officer at Farmers Bank before becoming Wood’s employee.
The indictment alleges the Wood’s crimes date back to 2012 and took place while she owned several businesses including one in Kansas City, Mo. – Professional Cleaning and Innovative Building Services, Inc. (PCI) – and three in Bonner Springs – Action Real Estate Services LLC; G&W Investments LLC, and Riverview Crossings, LLC.
The indictment alleges Wood obtained loans for herself and her companies through Farmers Bank by making false representations and submitting falsified documents to the bank.
What does the indictment say?
Among the allegations in the indictment are these:
• Wood obtained a loan on behalf of Riverview Crossings to purchase property in Bonner Springs in part by forging the signature of a second mortgage holder releasing the deed.
• Wood submitted falsified invoices totaling more than $100,000 to support fraudulent draws on the Riverview Crossings loan.
• Wood obtained a loan on behalf of PCI to buy property in Basehor in which she fraudulently inflated the purchase price to make it appear the loan met the bank’s loan-to-value ratio requirements.
• Wood obtained a $350,000 line of credit in part by fraudulently representing to the lender that her company, PCI, was awarded a contract to provide cleaning services at an Internal Revenue Service building in Kansas City, Mo. In fact, her company was not even a finalist for the contract.
• Wood diverted more than $200,000 from an escrow account for PCI to her personal account.
• Wood set up a 401(k) plan for PCI and embezzled more than $30,000 from the plan.
• Wood failed to file annual financial reports for the PCI 401(k) plan.
Farmer’s Bank received $12 million from the U.S. Treasury’s Troubled Asset Relief Program. In November 2012, the bank paid the U.S. Treasury approximately $11.4 million to redeem the funding, resulting in a shortfall of more than $500,000.
This is, in part, how Wood’s alleged fraud came to light, said Jim Cross, U.S. Attorney District of Kansas public information officer. TARP has special Washington, D.C.-based investigators watching for fraud in the program and they noticed something was amiss.
In the case of TARP money, when a bank loses money, it is really the American taxpayer that loses, Cross said. The investigators were wondering why the money was not being returned.
Yancey of Olathe pleaded guilty in June to conspiring to make false statements on a loan application while he was working as a senior vice president of a bank in Overland Park, Grissom said. Yancey, 55, pleaded guilty to one count of conspiracy to make false statements on a loan application. In his plea, he admitted the crime took place while he was working as a senior vice president and commercial lender at Farmers Bank in Overland Park.
Yancey conspired with another person to obtain and maintain a business loan of $850,000 from Farmers Bank for two companies by falsely representing the terms of a real estate purchase in Basehor. He falsely represented to the bank that the property’s purchase price was $1.1 million when in fact it was $850,000.
The false information made it appear the loan conformed to a maximum 75 percent loan-to-value ratio when in truth the loan was approximately 97 percent of the purchase price. He also falsely stated that the loan involved a seller carryback of $150,000 and a borrower equity injection of $125,000.
As for the most recent cases, if convicted, Wood faces a maximum penalty of 30 years in federal prison and a fine up to $1 million on each of the bank fraud charges, a maximum penalty of five years and a fine up to $250,000 on the charge of theft from an employee benefit program, and a maximum penalty of 10 years and a fine up to $250,000 on each count of violating ERISA. The Department of Labor, Office of Inspector General, the Special Investigator General for the Troubled Asset Relief Program, the Department of Labor Employee Benefits Security Administration and the FBI investigated. Assistant U.S. Attorney Jabari Wamble is prosecuting.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
More to the story
Wood has been involved in litigation since 2010 related to her failed attempt to buy the former New York Life Building, a prominent Kansas City landmark, from Kansas City Power and Light. Those legal actions charged she was engaged in a complex web of check kiting and fraud.
She filed for bankruptcy in 2012. This filing also sparked a lawsuit from one of her investors complaining of a similar scheme to con people into investing in her efforts to buy downtown real estate. These properties included the New York Life Building.
In the complaint, Dan Becker, a Waddell & Reed Financial Inc. executive, alleged that Wood juggled money around at several Kansas City banks, including Farmers, to artificially inflate her holdings.
Becker filed a claim for $6.1 million he says he invested with Wood between March 2010 and March 2012. He claimed Wood promised to pay him back from money held in an escrow account.
In Becker’s complaint, he asserts she “opened at least two dozen bank counts and kited hundreds of checks to create artificial bank balances.” Wood also allegedly created shell companies to “obfuscate her finances,” the complaint says.
According to a U.S. Bankruptcy Court District of Kansas spokesperson, this case was settled last year in favor of Becker via a consent judgement. Becker was awarded a $1.5 million non-dischargable settlement.