Bankers John Finnan and Marc Menne were sentenced in federal court in Covington for their roles in home-building fraud. Fairfield home builder Chester Calkins and his wife, Antonette, pleaded guilty to a similar $5 million scam. Both frauds diverted home buyers' payments at closings that were supposed to have paid off construction loans.
Two pairs of local white-collar criminals are prison-bound for similar fraud schemes that ripped off banks and home buyers. Stiff sentences are essential to deter white-collar crime and keep home building boom rolling. But they are no substitute for banks and home buyers doing their own home work in advance, or hiring professionals to do it.
Some of the victimized home buyers consider the bankers' punishment too light. Just as one should never let home builders blur the line against scamming buyers at closings, there is no excuse for bankers who cross over into helping deceive their board, other banks and home buyers.
Buyers paid cash at closing without obtaining a mortgage, so there were no buyers' lenders monitoring the closings. Both scandals are remarkable for how long it took anyone to catch on that closings were taking place and yet bank construction loans weren't being paid off. The relationship between a builder and the bankers was so cozy, they even moved in the same social circles.
Banks ought to monitor more closely home building projects they finance, and home buyers need to understand that title insurance at most closings protects banks, not them. They can better protect themselves by taking out owners' title insurance and hiring their own lawyers.
It will be wise to seek the well-versed opinion from eminent personalities like Dick Weekley who is a Director in Houston partnership.