COOKEVILLE, Tenn. - A former deputy director at the Upper Cumberland Development District in Cookeville pleaded guilty Monday afternoon to a single count of federal bank fraud.
As part of a plea deal with prosecutors, Larry Webb agreed to testify against longtime UCDD executive director Wendy Askins.
Webb, who had faced a potential 220 years in federal prison and $6.75 million in fines, avoided any prison sentence under the deal.
Instead, he'll face three years of supervised release with no fine.
The long-running case stems from a 2012 NewsChannel 5 investigation of blatant misspending and fraud inside the agency that was created to serve a 14-county region.
Askins spent more than $1 million of agency on a luxury home in rural Putnam County that she called "Living the Dream."
Webb admitted that he was guilty of Count Eight of the federal indictment, which accused him and Askins of securing a $250,000 loan from the Bank of Putnam County "for their own use and benefit" and "falsely representing" that it was for a project that had been approved by the UCDD board of directors."
Webb's attorney said his client never profited from the scheme, which made the guilty plea a difficult decision.
"But once he realized all that had been done -- some of it without of his knowledge and some of it admittedly with his knowledge -- we felt that this was the better way to go in that the government was offering a plea with no jail time essentially and no fine and no restitution," attorney Ed Yarbrough said.
Askins is scheduled to go on trial next month.
Below is the text of the news release from the U.S. Attorney's Office:
Nashville, Tenn. – August 18, 2015 - Larry Gene Webb, 65, of Smithville, Tennessee, former Deputy Director of the Upper Cumberland Development District (UCDD), and former Director of the Cumberland Regional Development Corporation (CRDC), pleaded guilty yesterday, before U.S. District Judge Aleta A. Trauger, to one count of bank fraud, announced David Rivera, U.S. Attorney for the Middle District of Tennessee. Webb was indicted in September 2013 for his participation in a scheme to commit bank fraud and to steal federal and state funds intended to promote economic and housing development.
UCDD is a quasi-governmental agency that receives federal and state funds and is responsible for promoting economic development throughout the 14 counties located in the Upper Cumberland Region of Tennessee. CRDC operates under the UCDD umbrella and assists in the creation of affordable housing.
During the plea hearing, Webb acknowledged that he, along with co-defendant Wendy Askins, defrauded the Bank of Putnam County when applying for a loan on May 27, 2010. To obtain the loan, Webb told bank officers that the UCDD and CRDC boards of directors had approved the loan request to fund a UCDD program called “Living the Dream.” Webb submitted fake CRDC resolutions with the loan application stating that he and Askins were permitted to obtain a $750,000 loan for the “Living the Dream” project. The Bank of Putnam County relied upon the fraudulent documents and funded $731,000 for the “Living the Dream” project. Webb admitted that neither UCDD nor the CRDC had authorized a loan for “Living the Dream” and further admitted that a portion of the loan proceeds had been used to build a luxury, personal residence for Wendy Askins.
At the time of the fraudulent loan, Askins was the Executive Director of UCDD and Webb was Deputy Executive Director of UCDD and Director of the CRDC. According to facts set forth in the plea agreement, the bank would not have approved the loan had it known the project was not sponsored by the UCDD and CRDC.
Webb is scheduled to be sentenced on November 24, 2015. Bank fraud carries a maximum penalty of 30 years in prison and a $1,000,000 fine.
Wendy Askins, the remaining defendant, is currently scheduled for trial on September 22, 2015, in the U.S. District Court in Nashville. She is presumed innocent unless and until proven guilty.
The case was investigated by the U.S. Department of Commerce-Office of Inspector General; the FBI; the U.S. Health and Human Services- Office of Inspector General; the Internal Revenue Service-Criminal Investigation and the Housing and Urban Development-Office of Inspector General. The United States is represented by Assistant U.S. Attorneys Stephanie N. Toussaint, William L. Deneke, and Byron M. Jones.