A Tampa mortgage broker pleaded guilty Thursday to conspiracy for his role in a scheme that ultimately led to Coast Bank of Florida's demise.
John Robert Miller, 62, pleaded guilty in federal court to one count of conspiracy to commit wire fraud. The plea was part of a deal struck with federal prosecutors, who agreed to seek a lighter sentence for Miller in exchange for his cooperation against co-conspirators.
He could face up to five years in federal prison and/or a $250,000 fine. He also agreed to pay more than $1.5 million in restitution.
That's how much Miller admitted to overcharging clients of his defunct brokerage, American Mortgage Link, who took home-construction loans from Coast between late 2004 and early 2007.
Miller said he charged 2 percent instead of his usual 1 percent fee at the behest of Coast's then-executive vice president of mortgage lending, who took 75 percent of the extra proceeds with Miller getting the rest.
"The co-conspirator should have reasonably foreseen the potential economic harm to Coast because of his breach of fiduciary duty," said Rachelle Des Vaux Bedke, an assistant U.S. attorney.
Prosecutors have not publicly identified the bank executive, but Phillip W. Coon held the post during that time period. Neither Coon, formerly of Bradenton, nor anyone else has been charged in connection with the case.
The bank fired Coon in February 2007 after news surfaced that Coast had loaned $110 million to 482 borrowers whose homes were to be built by St. Petersburg builder Construction Compliance Inc.
The builder did not finish most of the homes and later declared bankruptcy, triggering a series of events that ultimately led to a distress sale of Coast to Missouri-based First Banks Inc.
The sole charge against Miller stems from a Dec. 31, 2005, e-mail he received from the bank executive. The e-mail directed Miller to cut various checks from an account where the extra fees were deposited.
"The crime charged against Mr. Miller isn't that he defrauded any borrowers or investors," his attorney Eddie Suarez, said after the hearing. "The crime is that the banker said to him, 'If you want to be a part of this deal, you have to charge the extra point.' "
Before accepting his guilty plea near the end of an hour-long hearing, U.S. Magistrate Judge Thomas McCoun III repeatedly asked Miller if he understood what he was doing.
"Yes, I do," Miller responded each time.
When the judge asked if he was having any second thoughts during the hearing, Miller said, "I will stand by the agreement, sir."
McCoun accepted Miller's plea and released him on a $25,000 signatory bond, or a written promise to pay that much if he misses a court appearance. McCoun also allowed Miller to travel overseas for business, provided prosecutors know about it beforehand and have no objections.
No sentencing date was set.
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