Former Franklin Banker Pleads Guilty To Deceiving Feds

NASHVILLE, TN — The former chief operating officer of the now-shuttered Tennessee Commerce Bank pleaded guilty to charges he caused the bank to deceive federal regulators.

The Office of Acting U.S. Attorney Jack Smith says that Lamar Cox, 73, pleaded guilty April 21 for scheming to deceive the Federal Deposit Insurance Corporation prior to TCB's closure by regulators in 2012.

(For more updates on this story and free news alerts for your neighborhood, sign up for your local Middle Tennessee Patch morning newsletter.)

Under Cox's direction, the bank delayed reporting a $710,000 loss on the sale of $4 million in foreclosed property. Cox created a planned, fraudulent "posting error," so TCB reported just $270,000 of the loss in the third quarter of 2009, leading the bank to understate its loss by $440,000, deceiving shareholders and bank examiners about the true nature of TCB's tenuous financial condition.

TCB had received a $30 million TARP loan, all of which was lost when the bank failed in 2012.

"Cox chose lies and deception to understate the bank's losses and inflate its income. And, as the chief operating officer and member of the bank's board of directors, he made that decision to deceive in a key position of authority with decades of experience in finance, compliance, and lending. Tennessee Commerce Bank received a $30 million bailout from TARP, all of which was lost when the bank failed," Christy Goldsmith Romero, Special Inspector General for the Troubled Asset Relief Program, said.

Cox will be sentenced in August and faces up to 30 years in prison, a fine of up to $1 million, and restitution.

Image via Shutterstock