TBA Law Blog

Posted by: Kathryn Edge on Jun 1, 2013

Journal Issue Date: Jun 2013

Journal Name: June 2013 - Vol. 49, No. 6

My law office sports framed photographs of bank robbers Bonnie and Clyde, Willie Sutton and Cousin Jesse James (at least my mother always liked to tell people we were related to the infamous James Boys). Perhaps subconsciously I have felt the need to try and protect banks from the bad guys — more so those who use their positions to steal from the inside of banks, leaving to law enforcement the job of protecting my clients from the guys with guns who stick up terrified tellers. The late John Roberts, former United States Attorney, asked me once whether there were any crime for which I thought the death penalty appropriate. I pretended to be thoughtful for a moment and declared: “Yes, General — people who steal money from the inside of one of my banks should get the chair.” For a moment, he thought I was serious.

Hollywood has glamourized bank robbers through great films like Butch Cassidy & the Sundance Kid, a 1970 romance about two fun-loving rogues portrayed by two of the sexiest actors ever to make women swoon and men jealous — Paul Newman and Robert Redford. A darker, but still romanticized, movie about Bonnie & Clyde, starring Warren Beatty and Faye Dunaway, first aired in 1967, satisfying the public’s whitewashed view of the horrific crimes committed by the duo. Oliver Stone’s 1994 version, Natural Born Killers, starring Woody Harrelson, showed the lovers as maniacal criminals who didn’t care whom they shot down in the commission of their crimes. From Randolph Scott’s portrayal of the outlaw Bill Doolin in The Doolins of Oklahoma (1949) to Matthew McConaughey as Willis Newton in The Newton Boys, Hollywood has portrayed many of these bandits as fun-loving, comical criminals. Accuracy has never been highly valued by the film industry.

One of the most elegant of modern-day bank robbers was Willie Sutton, who was said to have declared that “[p]rison is just the price I may have to pay for my kind of lifestyle.” William Francis Sutton Jr. was called “the Actor.” Willie never used violence in his robberies, unlike infamous Cousin Jesse and the likes of Pretty Boy Floyd and Ma Barker. He was known for using disguises throughout his nefarious career, often donning police, postal and other uniforms to gain access, as well as facial makeup and hair coloring. Willie was incarcerated on multiple occasions and even engineered three prison breaks. In 1952, upon one of the captures of Sutton, the New York City Police Commissioner declared that “Sutton was the most sought after criminal in the United States. We’ve caught the Babe Ruth of bank robbers.” While there is much debate about whether Sutton actually said, when asked why he robbed banks, “That’s where the money was,” he did co-author a book about his life in 1979 called Where the Money Was. Sutton died in 1980 in Florida, after a short stint as a lecturer and consultant on bank security, declaring often that “crime doesn’t pay — unless you write a book.”[1]

Tennessee has not been immune to insider bank fraudsters, the most infamous of whom were probably the Butcher Brothers — Jake and C. H. — whose string of banks in Tennessee and Kentucky fell prey to greed and corruption in the 1980s. When the first of the Butcher Banks collapsed on Feb. 14, 1983, it began a domino slide of bank failures that made it clear that insider fraud and abuse were parts of the strategic plan for these institutions. The failure of the United American Bank in Knoxville, reported the FDIC in its public statements, initially made headlines because Jake Butcher was the principal organizer and promoter of the 1982 World’s Fair and twice was a candidate for governor. The Butcher organization included approximately 40 loosely affiliated banks and savings and loan associations that operated across regulatory jurisdictions, which, in the days before ready computer access, made the coordination of seven different regulatory agencies difficult. The FDIC estimated that its losses in connection with the failed Butcher banks amounted to approximately $382.6 million. Jesse, Willie and Sundance would have been envious.

More recent cases of bank fraud in Tennessee include:

  • A guilty plea by former president of the Oakland Deposit Bank to misapplication of bank funds for which Stephen Henry could receive up to 30 years in prison and up to a $1 million fine. His co-conspirator, Stephen Sims, a Memphis real estate investor, also pled guilty to three counts of bank fraud and was sentenced to 87 months in federal prison in July 2012. Sims was ordered to pay more than $2.4 million in restitution. The duo admitted to manipulating bank records to cover up loan fraud. While another investor bought the Oakland Deposit Bank, preventing its immediate failure as a result of these and other losses, ultimately, the bank that ended up with the Oakland Deposit Bank loans did fail, largely because of this insider abuse.
  • Former bank executive Joe Vance  pled guilty to four counts of fraud in April 2013. He could spend 35 years in prison. Vance was a branch “president” of Wilson Bank & Trust’s Carthage branch. He admitted that he had made uncollateralized loans to himself for $500,000, using the funds to pay workers at his construction company. Vance also admitted to making “fictitious loans” — loans in the names of individuals who had not authorized the transactions and who had no idea that loans were being taken out in their names. For those of us old enough to recall the Butcher Bank days, that sounds eerily familiar.
  • Former president of the Benton Banking Company Jim Goddard pled guilty to bank fraud in 2009, and received a 78-month federal prison sentence. Goddard would repackage large loans into smaller loans, using the names of fictitious entities with fake taxpayer ID numbers. Goddard assigned these loans to 13 addesses that he stocked for this purpose, many of which were merely post office boxes. All of this was to avoid detection that he was violating the state and federal laws about how much a bank can lend to any one borrower and that borrower’s related interests. Goddard was also worried that any serious scrutiny by banking regulators would lead to disclosure that he had also embezzled more than $1 million from the bank.
  • Also convicted in December 2009, of 10 counts of bank fraud, was Timothy Parkes, the co-founder of auto floor mat maker Remington Industries. Parkes was accused of making fraudulent entries on the books of the Benton Banking Company, in collusion with President Goddard. The reason, the prosecution said, was to disguise some of the bank’s earlier, troubled loans to Parkes’ business. Parkes spent two years in prison before the Sixth Circuit Court of Appeals overturned his conviction in early 2012, citing, among other errors, prosecutorial misconduct in connection with the prosecutor’s closing argument, and insufficiency of the evidence against Parkes. The Sixth Circuit’s opinion, United States of America v. Timothy H. Parkes, No. 09-6525, Feb. 2, 2012, makes fascinating reading about how fictitious loan schemes work.

I’m looking for more art for my walls. If anyone knows where I can find any of the old “Jake Butcher for Governor” posters (the one that says that he’d run state government like he ran his banks, preferred) or good poster-sized photos of Jake and C. H., let me know. In the meanwhile, I sit around wondering why people who steal from the inside of my banks don’t understand that keeping that many balls in the air at one time is more exhausting than ordinary hard work. Go figure.


1. I recommend L. R. Kirchner’s Robbing Banks: An American History, 1831-1999 (Sarpedon Publishers, 2000), for more fascinating stories about bank robbers, both old and more recent. I am grateful for the background this book provided for this column. See also, The Last Outlaws: The Lives and Legends of Butch Cassidy and the Sundance Kid, by Thom Hatch (New American Library, the Penguin Group, 2013).

Katie Edge KATHRYN REED EDGE is a member in the Nashville office of Butler, Snow, O’Mara, Stevens & Cannada PLLC, with offices in Tennessee, Mississippi, Alabama, Pennsylvania and Louisiana. She is co-chair of the firm’s Banking Subgroup and concentrates her practice in representing regulated financial services companies. She is a past president of the Tennessee Bar Association and a former member of the editorial board for the Tennessee Bar Journal.