The Wrong Way to Use Federal Bailout Money

After reading news that a Missouri bank CEO (Darryl Lane Woods) recently pled guilty to misuse of Federal bailout money – he bought a luxury condo in Florida for $381,487 – we are driven to ponder a certain question. Why did public hangings on the town square at high noon fall out of fashion? This seems like an excellent opportunity to resurrect the practice.

We’re not kidding. Woods gives sleazy a bad name.

In the words of Tammy Dickinson, United States Attorney for the Western District of Missouri: “At a time when many other Americans were losing their homes, he was siphoning off public funds to buy a luxury vacation condo in Florida. These federal funds were intended to help stabilize the economy during a fiscal crisis. Instead, this disgraced business leader took advantage of the situation to benefit himself and other bank executives, then lied to federal investigators in an attempt to hide his scheme.”

The amount Woods spent on the condo represented almost 40 percent of the total bailout money received in January 2009. In a masterful bit of understatement, Special Inspector General or TARP (Troubled Asset Relief Program) reminded us that the funds were not intended “…to bankroll the purchase of luxury vacation properties for bank executives.”

Hey, for once the federal government got something right.

So, rather than being dropped from a wooden platform with a sturdy rope around his neck, Woods plea agreement simply requires him to stay out of the banking industry. After the upcoming sentencing hearing, he may ultimately end up with one year in a federal prison, a $100,000 fine, and order of restitution, which all sounds like a pretty sweet deal to us.

The restitution might turn out to be a sweet deal for the opposing party. Note the date the condo in question was purchased (2009). That was in the midst of the housing crisis, folks. Woods is required to turn over ownership to the condo, and prices have recovered substantially, allowing the government to realize a nice chunk of capital gains on the property.

Not to paint this malfeasance with too broad a brush but it’s worth noting that Woods was the head of Mainstreet Bank in Ashland, Missouri, and a majority shareholder in the bank’s holding company Calvert Financial Corporation.

Memo to the bank’s board of directors; might want to tighten up that employment screening process just a bit. (Top image: Flickr | Discount Vacation Rentals Online)

The JasonHartman.com Team
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