SEATTLE - The former CEO of a failed Burlington bank has been sentenced to three years in prison after pleading guilty to a felony charge related to the concealment of the bank's deteriorating financial condition.
James E. Bishop, 70, of Mount Vernon also faces two years of supervised release and a $300,000 fine.
In August 2013, Bishop pleaded guilty to a federal charge of making a false entry in a report of an insured bank. According to a press release from the office of U.S. Attorney Jenny Durkan, Bishop has admitted that between 2009 and 2011 he and his son, then the bank's president, concealed from regulators the mounting number of loans that were in default.
Among other things, prosecutors charge that the Bishops made overdrafts on borrowers' checking accounts, sometimes without the borrowers' knowledge, to cover payments on other loans. That made it appear the loans were not in danger of default, and misled regulators about the seriousness of the bank's financial problems.
The rising tide of losses led Washington state regulators to step in and shut down Summit Bank in May 2011.
According to Durkan's press release, Chief U.S. District Judge Marsha Pechman noted the length of the scheme, the number of accounts manipulated and the control that Bishop exerted over employees to stop them from notifying regulators.
"This defendant falsified reports to save 'his' bank and his fortune," Durkan said. "Rather than be upfront with the regulators about the condition of the bank, the defendant and his son initiated a high-stakes shell game to deceive the FDIC. Through his actions he shifted the risk for losses to the FDIC, and consequently to the public."
According to records filed in the case, Bishop became CEO of Summit Bank and chairman of its board of directors in 2005. His son, James E. Bishop II, served as president of the bank, and both were significant shareholders.
James E. Bishop II has also been charged in the case. His sentencing is scheduled for Dec. 6.
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