U.S. Drops Investigation of BSD Chief Due to a Lack of Evidence
Federal authorities have dropped their investigation into whether BSD Bancorp Chairman James Brown’s involvement in two real estate loans by a BSD subsidiary may have violated any laws.
Law enforcement sources on Friday said there was “insufficient evidence” to proceed with the case.
A letter informing Brown of the investigation’s culmination was delivered this week. Brown could not be reached for comment Friday.
However, Louis Cumming, executive vice president of the Bank of San Diego, BSD’s largest subsidiary, said he received a letter from federal prosecutors on Thursday saying that the investigation had been closed. Cumming had been interviewed by the FBI last summer.
The FBI opened its investigation in August, focusing on two adjacent pieces of property in Santee that were bought by Silberrad Development, which is owned by Brown. The people who originally purchased the parcels had secured loans from the Bank of San Diego.
Auditors from the Federal Deposit Insurance Corp. referred the case to the FBI after a routine examination of BSD’s books last year.
There were two key issues in the investigation, according to sources: whether the original loans were “straw man” transactions, with Brown as the intended beneficiary of the loans, and whether Brown should have disclosed to BSD that his development company had purchased the land.