ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Friday, January 3, 1997 TAG: 9701030088
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: JAN VERTEFEUILLE STAFF WRITER
Roanoke attorney Barry Flora has agreed to plead guilty to a federal charge of misappropriating funds, stemming from a loan he received from the now-defunct First Security Bank.
The charge is only a misdemeanor, but he faces up to a year in prison.
Flora was scheduled to plead guilty Thursday, but the hearing was postponed until February because the judge was unavailable. The plea agreement was unsealed as scheduled, however.
Flora's attorney, John Edwards, declined to say much before the guilty plea hearing.
"All the facts will come out at the hearing, how this is a technical charge," Edwards said.
The government says Flora obtained a $40,000 loan from First Security Bank under the pretext of needing it for Heritage Insurance Agency, a business he owned. But he actually turned the money over to business associate William C. Roberts, who needed money and had reached his credit limit at the bank, according to the charge against him.
The note on the $40,000 loan was taken over by another creditor after regulators shut down First Security in May 1991 and has been "satisfied in full" by Flora, his attorney said.
Flora also could face punishment by the Virginia State Bar.
First Security was open for only three years. The Federal Deposit Insurance Corp. took over the bank and ended up suffering a multimillion-dollar loss.
The bank, founded in 1988, was connected to a "straw man" loan scheme run by the late Richard Hess, a Salem mortgage broker. Walter Eugene Hoffman, president of Hill Brothers Shoe Co. in Lynchburg, was found guilty of applying for bogus loans intended for Hess.
Bank officer Thomas E. Hartman pleaded guilty to conspiracy and bank fraud for his part in approving "straw man" loans made in the names of about 100 people but intended for Hess.
The bank's president, Gary Peck, pleaded guilty to money laundering in 1995 in connection with another loan he made to Roberts and was sentenced to 13 months.
Roberts, of Rocky Mount, and Carson W. Carter of Roanoke pleaded guilty last year to bank fraud for running a check-kiting scheme that contributed to First Security's failure. They defrauded two banks of $1.9 million.
Roberts, who owned an amusement park in Huntington, W.Va., and Carter, who owned a Roanoke real estate investment company, used 16 checking accounts to float checks between First Security Bank and the Bank of Buchanan (now Bank of Botetourt), prosecutors said.
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