TWO FORMER BANK EXECUTIVES, BUSINESS OWNER CHARGED WITH SCHEME TO DIVERT BANK FUNDS FOR PERSONAL BENEFIT

TWO FORMER BANK EXECUTIVES, BUSINESS OWNER CHARGED WITH SCHEME TO DIVERT BANK FUNDS FOR PERSONAL BENEFIT

WASHINGTON, D.C. – Assistant Attorney General Christopher A. Wray of

the Criminal Division and U.S. Attorney Alice H. Martin of the Northern

District of Alabama announced today the filing of a 25-count indictment

against two former executives of Community Bank of Blountsville, Alabama, and

the owner of J&M Materials, Inc., of Blountsville, in connection with a scheme

to divert Community Bank funds for personal benefit.

The indictment charges Kennon R. Patterson, Sr.; Larry E. Bishop; and Jimmie

D. Childers with conspiracy, bank fraud, misapplication of bank funds, false

statements to a financial institution, and false entries in the books and

records of a financial institution. Patterson has also been charged with money

laundering and filing false tax returns. The government is seeking forfeiture

of proceeds derived from the fraudulent scheme.

Patterson, 61, was chairman and chief executive officer of both Community Bank

and Community Bancshares, Inc., a Delaware corporation and holding company for

Community Bank. Bishop, 58, Community Banks vice president of construction

and maintenance, acted as the general contractor and was responsible for

receiving and approving construction invoices on Community Bank projects.

Childers, 51, of Oneonta, Alabama, owned and controlled J&M Materials, which

provided construction services on commercial and residential construction

projects, including Community Bank and Pattersons personal projects.

The charges stem from the defendants alleged participation in a scheme to use

$2,150,000 of bank funds for construction work on Pattersons personal

projects, including the building of a 17,000-square foot residence. The

indictment further alleges that Patterson obtained more than $5 million

dollars in bank loans to build the residence, but used more than $1.34 million

of those funds for other purposes.

The prosecution of corporate fraud cases send the message that CEOs are not

above the law, said U.S. Attorney Alice H. Martin. It is an extremely

serious matter when the CEO of a financial institution uses the bank for his

own personal gain.

In October 2002, a federal jury in Birmingham, Alabama convicted Dewey and

Linda Hamaker and their company, Morgan City Construction, Inc., of conspiracy

and bank fraud for their role in the scheme.

The maximum sentence for bank fraud, misapplication of bank funds, making

false statements to a financial institution and making false entries in the

books and records of a financial institution is 30 years in prison and a $1

million fine. The maximum sentence for money laundering is 10 years in prison

and a $250,000 fine. The maximum sentence for filing false tax returns is

three years in prison and a $100,000 fine.

The case is being prosecuted by Trial Attorneys William C. Athanas and Malinda

R. Lawrence of the Fraud Section, Criminal Division, U.S. Department of

Justice, along with Assistant U.S. Attorney James D. Ingram of the Northern

District of Alabama. The investigation is being handled by the Federal Bureau

of Investigation, the Federal Deposit Insurance Corporations Office of

Inspector General, and the Internal Revenue Services Criminal Investigation

Division.

Members of the public are reminded that the indictment contains only charges.

A defendant is presumed innocent of the charges and it will be the

governments burden to prove a defendants guilt beyond a reasonable doubt at

trial.