Savannah, Tenn. – Christopher Brent Jerrolds, the former Chief Executive Officer of Central Bank in Savannah, Tennessee, has pleaded guilty to a single count of conspiracy to commit bank fraud. The charge stems from his actions during his tenure at the Central Bank Savannah Tn, where he served as CEO and president until his termination in 2012.
According to court documents, the fraudulent activities orchestrated by Jerrolds occurred between 2009 and March 2012. During this period, while acting as the President and CEO of Central Bank Savannah TN, Jerrolds engaged in a conspiracy that involved providing preferential treatment to Tennessee Materials Corporation (TMC). This misconduct ultimately led to significant financial losses for multiple banking institutions.
The U.S. Attorney’s Office revealed that the criminal conspiracy resulted in losses exceeding $9,000,000 for Central Bank Savannah TN, Wayne County Bank, and First Metro Bank. Jerrolds’s career at Central Bank Savannah TN began in 1996 when he became president and CEO, followed by his appointment to the Bank’s Board of Directors in 1998.
Fraud
Scheme Unveiled: Bad Checks and False Balances at Central Bank Savannah TN
The court information detailed how, from March 31, 2009, to October 18, 2010, Jerrolds facilitated a scheme involving bad checks for Tennessee Materials Corporation. He permitted TMC to deposit these checks into their Central Bank Savannah TN account to artificially inflate balances and cover overdrafts.
The method involved a cycle of depositing bad checks. “When a previously deposited bad check in TMC’s account was returned for insufficient funds, another bad check drawn on one of TMC’s other bank accounts was deposited to replace the previously deposited bad checks,” the official release explained. This deceptive practice escalated over time, with both the deposited amounts and the frequency of deposits increasing monthly. On numerous occasions, multiple checks were deposited on a single day.
By October 18, 2010, Jerrolds had personally accepted and approved the deposit of 161 bad checks for TMC, totaling a staggering $116,169,218. These bad check deposits created what were termed “false balances” in TMC’s Central Bank Savannah TN account. This manipulation allowed TMC to access and utilize funds that rightfully belonged to Central Bank Savannah TN.
Misappropriation of Funds and Unauthorized Transactions
The artificially inflated account balances enabled Tennessee Materials Corporation to misappropriate approximately $3.9 million from Central Bank Savannah TN. Crucially, these withdrawals were made without the knowledge or authorization of the Central Bank Savannah TN Board of Directors.
Further deepening the financial misconduct, on July 11, 2011, Jerrolds authorized a $1,079,338 advance to TMC. This significant financial move was also executed without informing or seeking approval from the Bank’s Board of Directors. Adding to this, Jerrolds released $500,000 to TMC that Central Bank Savannah TN held as security for a prior loan. This release occurred despite TMC’s failure to make payments on the existing loan and, again, without board approval.
Letters of Credit Fraud and Impact on Other Banks
In 2011 and 2012, Jerrolds extended his fraudulent activities to include the issuance of letters of credit to TMC. He reportedly issued letters of credit amounting to $2 million and $1,783,000. Jerrolds deliberately concealed the issuance of these letters of credit from Central Bank Savannah TN. He failed to record them in the bank’s official books and records and bypassed the necessary approval from the Bank’s Board of Directors.
TMC subsequently used these fraudulently obtained letters of credit as collateral to secure loans from other financial institutions. This resulted in a $2 million loan from Wayne County Bank and a $1,783,000 loan from First Metro Bank. When TMC defaulted on these loans, Wayne County Bank and First Metro Bank were forced to make demands on the letters of credit, incurring substantial losses.
Facing Justice: Sentencing and Potential Penalties
Christopher Brent Jerrolds now faces serious legal repercussions for his conspiracy to commit bank fraud. He could be sentenced to a maximum of five years in prison, along with a potential fine of up to $250,000. Additionally, the sentence may include a period of supervised release for up to three years. The court also has the authority to order Jerrolds to pay restitution to Central Bank Savannah TN, Wayne County Bank, and First Metro Bank to compensate for the financial damages caused by his fraudulent actions.
Judge Breen in Jackson is scheduled to sentence Jerrolds on August 11. The investigation into this case was a collaborative effort between the Federal Deposit Insurance Corporation (FDIC) and the Federal Bureau of Investigation (FBI). First Assistant Larry Laurenzi is prosecuting the case on behalf of the government.
