POM Uncovers Fraud for Middle Market Bank and Recovers Nearly 25% of $60M Loss
The POM business partner highlighted in this case study is a middle market bank with a portfolio focused on corporate loans and licensed credit with personal guarantees.
In early 2011, POM began an engagement with a middle market bank with a portfolio focused on corporate loans with personal guarantees and licensed credit with personal guarantees. POM reviewed the bank’s receivables, employing knowledge of corporate structure and documentation processes to develop a roadmap of responsibility and personnel accountability.
While reviewing the bank’s accounts, POM found an account showing that a company with obligations, along with the guarantor, was sold for an amount of money that seemed unrealistic. The credit line was in excess of six figures. While reviewing the bank’s corporate structure, POM found that one of the corporate principals of the sold company was also an officer of the bank.
The POM Solution
Upon discovering this questionable company sale, POM began reviewing the bank’s other accounts in detail and indentified substantial fraud occurring in the bank’s portfolio. The borrowers were real but the notes and loans had never been approved. POM worked with the bank’s board of directors and the FDIC to recover a substantial portion of the bank’s assets.
Due to POM’s diligence in reviewing the bank’s accounts, the person responsible for the fraud was identified and arrested. Over $60 million in fraud was perpetuated and to date, POM has recovered a significant percentage of the loss. POM and the bank are continuing to partner to ensure each account POM is handling is reviewed for any potential risk. The bank continues to have an excellent reputation with its customers.