WOW throwing a stone at someones elses dog is somehow better than throwing one at your own. There is an attribute called grace that seems to be lacking if not non existent. I too have never defrauded anyone but I have made many mistakes. I hope for all parties involved that the truth will be exposed be it good or bad because the truth stands on its own regardless. It is not affected or changed by opinion, speculation, hear say or false witness. This issue will follow a course yet to be determined.

I'll CHUCK that first stone. I've never DE-FRAUD-ED people and the Fed's out of $$$mm.

"I have a loan at AFB and will continue to do business with them" - not for long. It will be nearly impossible for AFB to stay in business.

Who out there can throw the first stone? Life is made up of plenty of mistakes we make. Its how we take care of those mistakes and learn from them is what counts. I have a loan at AFB and will continue to do business with them. Get off your high horses & look back to see if you have made any mistakes before you start throwing.

This story is only the tip of the iceberg in relation to the issues facing AFB. Reckless/fraudulent banking practices have been hurting more than just the people that default on these loans. Since the FDIC issued the cease and desist order, AFB appears to have been releasing people for unjust reasons. I'm not certain if it's just downsizing in disguise or if maybe these people knew something they shouldn't have known, but several people have been wrongfully terminated. Their HR department even lied during unemployment hearings to make sure AFB didn't have to pay out. Then several people in the HR department were terminated. They knew too much! HA! This is similar to the Roswell UFO Incident, but in this case, I think I've identified what is flying around up there. . .

The bottom line is that AFB has caused and will continue to cause a lot of grief for a lot of people.

LOL Pinpointers, thanks for starting my Friday with a good laugh.

answerman...the state journal is just regurgitating Lexington herald stories...that's the difference between investigative journalists and local recreational creative writersthey should stick to writing about goats and prize cows at county fairs..

Kristen, look above your comment (now mine) See the AFB advertisement.....

Puh-leeze might be onto something. If Tate's house in so extremely undervalued by our long-time PVA Patsy Conway, I wonder what the other values are in this hoity toity neighborhood. Are they getting a tax break because they are the "rich" people in town? I bet the folks on Holmes St. do not have the same percentage of under-valuation.

Why has it taken over a year for this story to appear that is obviously real fraud while the Frankfort State Journal has printed front page stories of a $30,000 fire department story. When someone writes a bag check in Frankfort, the State Journal prints it in the paper. Citizens of Frankfort have gossiped about this for a year. What took so long?

Change orders can run construction costs way up way fast. Whet is the PVA doing assessing a home before it even has a certificate of occupancy? Someone might want to look into that and why the assessed value is so far below the actual value - even in the current market that's a $1 million house. Hate to see a nice guy like Tate come to this, but greed and love make some good people do crazy things. I believe Tate was bitten hard by both.

As usual, the Lex Herald Leader wrotethis story before the local paper did. Never have been able to figure out how a Lexington paper scoops the local paper all the time.
The link: http://www.kentucky....2.html
posted on july 13.

Here is the HL story:
Borrowers say fraud fueled rise of banker
By John Cheves
jcheves@herald-leader.com

For six years, the bosses at American Founders Bank praised loan officer James B. Tate for his aggressive lending across Central Kentucky.


The sums Tate lent were "extraordinary" and "far exceeded expectations," they raved. As his portfolio swelled by tens of millions of dollars, Tate climbed in the ranks to become executive vice president and senior loan officer. His salary more than doubled to $165,000 a year, plus $134,000 in performance bonuses. Both Frankfort branches were placed under his command; cardboard cutouts of a grinning Tate adorned their lobbies.


But now borrowers allege that Tate's rise " which helped put the new, locally owned bank on the map " was fueled by fraud.


A growing stack of counter-claims by debtors say that, at Tate's direction, forged signatures shifted debt onto unsuspecting victims; schemes rolled bad loans around to keep them off the books; new loans went to hastily founded dummy corporations to pay off old loans; and Tate used loans to build himself a sprawling new Frankfort home, hiding his actions behind a "straw man" who ended up with the house and the debt.


Everything crashed last year. Federal and state regulators examined American Founders and uncovered enough serious problems " particularly bad loans and inaccurate records " to hit the bank with a "cease-and-desist order," which put it on probation and warned it to clean up its act.


After the investigation, Tate was ordered to resign. So was his supervisor, bank President Tim Wesley. The board of directors " which includes former Gov. Brereton Jones and former state Democratic Party Chairman Tracy Farmer " was sharply criticized by regulators for inadequate supervision that allowed the mess to happen.


This year, American Founders is struggling to right itself. It is losing money, its capitalization is shrinking and 8 percent of its loans are at least 90 days past due, which is six times worse than its peer group.


As the bank sues borrowers to collect on Tate's old loans, it's getting hammered with counter-suits by debtors alleging fraud. At least eight claims have been filed so far in Fayette, Woodford, Scott and Franklin counties, involving more than $5 million.


"Jim Tate was by far their leading originator of loans," said Larry Zielke, a Louisville attorney for several of those suing the bank.


"He generated one-quarter of a billion dollars for the bank over four to six years," Zielke said. "He was getting slapped on the back and told, "Keep it up, Jim!' And so he did."


Mum's the word


Nobody at American Founders wants to talk about the fraud allegations, the Federal Deposit Insurance Corp. investigation or Tate.


No criminal charges have been filed. The U.S. attorney's office in Lexington wouldn't say whether it is reviewing the case for possible prosecution. But there is enough litigation to drag on for years.


The chairman of the bank's board " Farmer, a wealthy Thoroughbred horseman who long has given counsel to Kentucky governors " said he preferred not to comment, on the advice of his attorneys.


Jones, the board member and former governor, who has borrowed millions from the bank to purchase farm land, did not return calls.


American Founders' new executives have nothing to say about what happened before they were hired to replace Wesley and Tate, said spokesman Mike Balog.


While 2007 was "a difficult year," Balog acknowledged, the bank is busy fixing its problems.


"We believe it is very important to separate the events of the past from those of the current and future," Balog said in a statement. "We cannot and will not comment on any pending litigation."


Tate, 45, likewise is staying mum. He did not respond to a request for comment. His attorney did not return calls.


According to a February deposition Tate gave in one of the fraud counter-claims, contained in court files, he remains unemployed. He, his wife, Gina, and their six children still live in their modest Frankfort home " he never claimed the larger house allegedly built for him " existing on his savings and retirement accounts and the generosity of his parents.


This has been a miserable time, he said in the deposition. The day that the bank told him to resign or be fired, he had a newborn baby in intensive care at the University of Kentucky Hospital.


"I've tried as best as I can to block out the first four or five months of last year," Tate said.


A popular local guy


Tate joined American Founders in 2001 as it was launched in Frankfort by a circle of local businessmen with ties to the state Democratic Party and the horse industry.


(The bank " which later expanded to other cities, including Lexington and Louisville " is owned by fewer than 500 people. When its mismanagement was exposed last year by the FDIC order, its stock crashed from $15 a share to about half that, according to a lawsuit filed in Fayette Circuit Court by a shareholder.)


Tate looked like a great hire for a Frankfort loan officer. He grew up in Frankfort, knew plenty of people in the community and worked at other banks there in the 1980s and '90s. He even took a political appointment under Gov. Paul Patton overseeing the state's bank examiners.


His job evaluations praised him for a warm, easygoing attitude that built friendships with customers.


"He's not a typical banker. He's really interested in you and what you're doing," said Brad Nolan, a local business owner who served with Tate on the Frankfort Country Club board. "Everyone in town is a good friend of Jim Tate."


Hiding bad loans


However, Tate's accusers " some of whom have known him for years " say in their counter-claims that he misled and manipulated them.


Most of the fraud claims follow a similar pattern: Tate would lend money to small businesses " including a bakery, a sports merchandiser and home builders " that sooner or later discovered that they couldn't make payments on time.


The bank would have been unhappy about failed loans. So Tate, according to the claims, arranged to hide the debt while the borrowers presumably would try to pay it.


Sometimes other people's signatures allegedly were forged so it appeared they assumed the debt for the moment. Other times, dummy corporations allegedly were created for the sole purpose of accepting new loans used to pay off old loans.


Lee Tevis, a Georgetown builder, said in his claim that Tate told him to create several corporations solely to move around his mounting debt. Eventually, Tevis said, his business depended on this "refinancing Ponzi scheme."


"These are things that ought not happen at a bank," said Nancy Schook, an attorney for Tevis.


In the end, borrowers said they had staggering debts they could never repay. This led to failures, foreclosures, even bankruptcies. A couple of borrowers had to explain to outside parties " including, for one, his mother " how their signatures ended up on loan documents that spread the liability.


Lexington attorney R. Bruce Stith III said in a claim that his signature was found on documents for one of his employees taking a 30-year mortgage, although he did not attend the closing supervised by Tate where the signing took place.


The bank later sued Stith and his employee for $155,000 she allegedly owed. Stith sued back.


"Either these signatures are forgeries, or ... they were obtained by fraud," Stith said in his claim.


Building a new home


Tevis, the builder, has an additional complaint.


In his claim, Tevis says Tate hired him to build a two-story home for the Tate family near the Frankfort Country Club using hundreds of thousands of dollars in loans from American Founders.


But Tate did not want to be identified as the borrower, because "inside loans" to bank officials are closely monitored by regulators, according to the claim. So the loans and the house, now assessed at $400,000, would stay in Tevis' name until work finished.


"Tate devised a scheme whereby Tevis would act as a straw man for Tate's construction loan," Tevis said in his claim. Later, Tevis said in the claim, Tate also took $32,000 from him in loan money to buy a sport-utility vehicle.


After bank regulators swooped in last year, Tevis said, he was left holding the bag. Tate did not buy the new house or repay the truck money, and as a result, Tevis said he has been seriously damaged. The bank is suing Tevis for repayment.


Tate can't remember


In the February deposition, Tate said he can't remember a lot about his loan deals, and he no longer has access to the bank paperwork that might refresh his memory.


For example, asked whether he told a Frankfort man to forge his mother's signature on documents so their family trust could assume liability for a friend's business loan, Tate replied, "I don't recall suggesting that."


"I can't remember the details of the conversation. I know it was a concern about the level of debt and, you know, trying to come up with a way to get some of it moved off the bank's books," Tate said. "Specifically, you know, did I say "X, Y, Z have to happen' and "Do this, that and the other'? I can't tell you one way or the other."


In its responses to the counter-claims in court, American Founders says it should not be held responsible for what Tate might have done, because if he committed fraud, he acted outside the scope of his authority.


The bank is entitled to hope, but that's a hollow argument, opposing lawyers say.


Tate helped lead American Founders for years. The board of directors steered customers his way, approved his promotions and bonuses and even tried to award him a severance package when he was forced to resign. (Bank regulators blocked the severance package, Tate said.)


It's time for the bank to own up to what Tate did, said Wanda Repasky, a Prospect lawyer.


"He has left a trail of destruction," Repasky said. "But AFB has taken the position that it's everyone's responsibility but the bank's."