Bennet, Udall, Markey Urge Department of Justice to Investigate Failure of New Frontier Bank
U.S. Senators Michael Bennet and Mark Udall, and Congresswoman Betsy Markey today urged the U.S. Department of Justice to investigate serious allegations of fraud in the collapse of the Greeley, Colorado-based New Frontier Bank. Over the past several months, Senators Bennet, Udall and Congresswoman Markey have made several efforts to assist farmers and local businesses to work through the challenges posed by the bank's closure. This recent effort seeks to hold accountable those responsible for potentially fraudulent actions.
In a letter to U.S. Attorney General Eric Holder, the lawmakers wrote, "The bank's failure has devastated numerous family farms and small businesses that form the foundation of the economy in northern Colorado. As a result of the failure, too many productive farms are facing foreclosure and many small businesses are laying off employees or closing their doors."
The Denver Post chronicled numerous allegations indicating that the bank may have been committing fraud. The Greeley Tribune documented other irregularities.
In April of 2009, the Colorado Division of Banking closed New Frontier because it had engaged in unsafe practices and lacked adequate capital. The bank's failure has had strong negative implications on the economy of northern Colorado and cost the FDIC's deposit insurance fund hundreds of millions of dollars.
The full text of the lawmakers' letter to Attorney General Holder is included below:
The Honorable Eric Holder
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, D.C. 20530
Dear Attorney General Holder:
We write to request that the Department of Justice investigate several disturbing allegations that have arisen regarding the failure of New Frontier Bank in Greeley, Colorado (hereinafter, "New Frontier").
Last April, the Colorado Division of Banking closed New Frontier because the bank had engaged in unsafe practices and lacked the necessary capital to continue operating. Shortly after the Federal Deposit Insurance Corporation ("FDIC") was named as a receiver, it estimated that New Frontier's failure would cost its deposit insurance fund approximately $669 million. The losses to the fund, however, may ultimately total up to $1 billion.
The bank's failure has devastated numerous family farms and small businesses that form the foundation of the economy in northern Colorado. As a result of the failure, too many productive farms are facing foreclosure and many small businesses are laying off employees or closing their doors.
Recently, the Denver Post investigated a number of new allegations surrounding New Frontier's failure that raise serious questions about whether the bank operated in a fraudulent manner. For example, a former New Frontier board member indicated that loan officers were asked to re-write delinquent loans prior to examinations in order to mask the bank's tenuous financial condition. Separately, as New Frontier's financial condition continued to deteriorate, officers may have forced borrowers to purchase stock in the bank's holding company before it would extend any credit. Coupled with earlier reporting from the Greeley Tribune, these allegations represent a disturbing pattern of behavior that have led to economic losses across the region.
Given the enormity of the failure, we request that the Department of Justice investigate the allegations outlined above as well as others cited in the attached articles. We have also enclosed a copy of the FDIC Inspector General's material loss review, which provides further background about the bank's failure.
If the Department of Justice determines that New Frontier officials violated federal statutes or committed fraud, those responsible should be prosecuted to the fullest extent of the law.
As we continue to look for ways to assist the communities affected by the collapse, a thorough investigation of these allegations can provide some assurances to the people of northern Colorado that the bank is being held accountable for its actions.
Thank you for your attention to this matter.