3 Bankers Indicted


Federal Deposit Insurance Corp. personnel move equipment into the closed Coastal Community Bank branch on U.S. 98 in Panama City Beach in July 2010. Federal and state regulators seized the bank.

Terry Barner / News Herald file photo
Published: Thursday, August 8, 2013 at 11:55 AM.

PANAMA CITY — Three area bankers are expected in court Thursday in response to a federal grand jury indictment charging them with a dozen crimes.

U.S. Attorney Pamela Marsh announced the indictments against Donald Terry Dubose, 65, of Panama City Beach; Elwood Ladon West, 39, of Monroeville, Ala.; and Frank Alfred Baker, 61, of Marianna, on Wednesday afternoon. Dubose and West were executives with Coastal Community Investments, a holding company that controlled Panama City Beach-based Coastal Community Bank and Port St. Joe-based Bayside Savings Bank before they failed in July 2010. Baker was a Coastal attorney and its largest shareholder.

The three are accused of ripping off millions of dollars from a Federal Deposit Insurance Corp. (FDIC) program designed to ensure banks could find loans from other banks.  

Under the Temporary Liquidity Guarantee Program, which was created during the onset of the Great Recession to help stabilize the economy, the FDIC would pay a lender who could not recoup a loan made to another bank, similar to how the FDIC repays depositors if their bank fails.

According to the 19-page indictment, which had been sealed until Wednesday since the grand jury returned it July 9:

In October 2007, Dubose and West, as Coastal’s chief executive officer and chief financial officer, respectively, sought a loan from another bank for $3 million with the common stock of both banks used as collateral. They got the loan, but when it came time to repay they were unable. By October 2008, the loan went into default and the lenders stood to take control of the stock in the banks used as collateral, which would have rendered their shares worthless.

Under pressure from the lender, Dubose, West and Baker sought to borrow money from a third bank, CenterState Bank of Florida, under the FDIC program. But to qualify for the program, Coastal’s outstanding debt had to be unsecured, and it wasn’t.

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