MANATEE — The man most responsible for the mountain of bad loans that brought Bradenton-based Coast Bank to its knees last year will enter a plea in federal court at 10 a.m. Wednesday on conspiracy and money-laundering charges.
Philip William Coon, 55, agreed to plead guilty to charges of conspiracy to commit wire fraud and private sector honest services fraud, as well as money laundering, for his part in a scheme that skimmed money off the top of mortgages on home loans.
Coast Bank was forced to sell itself last year after $110 million in loans to 482 borrowers failed to perform.
The majority of the borrowers’ homes were built by an insolvent builder, Construction Compliance Inc., whose owner eventually claimed bankruptcy.
Coon was the head of construction loans at Coast Bank and was a high-volume producer.
His commissions on loans soared from $52,190 in 2002 to $308,436 in 2005, Securities and Exchange Commission documents show. Insiders at the former bank say Coon’s loan activities went largely unchecked.
Many of the borrowers were investors who wound up holding mortgages on homes that were never built or only partially completed. Shareholders in Coast Bank’s holding company lost millions as a result of the debacle.
Federal prosecutors say Coon and John Robert Miller, the president of American Mortgage Link, concocted a scheme to tack an extra point onto each mortgage and split the proceeds.
Coon received three-quarters of the proceeds and Miller took the rest, according to federal officials.
As part of the plea agreement, Coon is expected to forfeit cash and assets worth more than $1.5 million that were obtained through the scheme. He will also be ordered to pay restitution.
He faces a maximum of five years in prison, followed by three years of supervised release and a fine of $250,000.
For his cooperation, prosecutors have recommended sentencing at the lower end of the guidelines.
Miller pleaded guilty in September to charges of conspiracy to commit wire fraud. He is scheduled to be sentenced in January.
Coon told prosecutors he had Miller funnel the skimmed proceeds into the checking accounts of a shell corporation. He used a debit card linked to the accounts to pay for international travel, real estate, a piano, jewelry, clothing and wine, according to prosecutors.
James Felman, Coon’s attorney, said his client has cooperated with prosecutors and only caused harm to the bank and not the individual borrowers. He said the builder, and not the borrowers, paid the extra point on the mortgages.
“This did not hurt consumers,” Felman said. “The reason these loans went into default and the reason these people lost money is not anything Mr. Coon did. It’s because the market went south. If the market had not crashed, people would have been thrilled to make these deals and would have made a lot of money.”
Alan Tannenbaum called that argument “obnoxious.”
Tannenbaum represents more than 100 borrowers who have fought to get out of their loans because their homes were not completed.
“What it’s (Felman’s argument) basically saying is, no one complains about illegal skimming when a deal goes well and somehow that justifies it,” Tannenbaum said. “I find that argument obnoxious. It’s like, ‘Nobody would have caught us if the market had continued ascending.’ That’s what I’m hearing.”
Tannebaum believes that any restitution from Coon should go to borrowers.
The plea agreement, however, states that restitution may be made to “any victim of the offense, or to the community” and doesn’t specify recipients.
Amy Filjones, a spokeswoman for the U.S. Department of Justice, said prosecutors would not comment further on restitution than what was specified in the plea agreement.
“They’re giving restitution for skimming,” Tannenbaum said. “And the question is, who is the victim of the skimming?”
Coon’s court appearance will be in Middle District federal court in Tampa.
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