Banker tied to Rep. Waters answers critics
The banker at the center of the Rep. Maxine Waters ethics controversy is firing back at his critics, saying sex and drug cases against him were “unequivocally dropped” and that the decision by his institution not to make home loans in some low-income neighborhoods was financially prudent.
OneUnited Bank Chairman and Chief Executive Kevin L. Cohee declined to talk about Waters, saying he wouldn’t discuss pending legal matters. He said that would have to wait for resolution of House Ethics Committee charges that the longtime congresswoman from South Los Angeles intervened improperly with the Treasury Department on his behalf after his bank suffered huge losses at the height of the financial crisis. The bank received $12 million in federal bailout funds that it has yet to repay.
“We’ve been taking an unfair pounding,” Cohee said in a telephone interview Thursday from near Boston, where OneUnited is based. “I’m not a bad guy. We’re not bad people. We’ve spent our entire lives trying to make a positive difference in the world. And we’re going to continue to build OneUnited into black America’s bank.”
The Times reported Wednesday that the black-owned bank, which has touted itself as a financial institution for the underserved, financed a luxurious lifestyle for Cohee that included a Porsche and a $6.4-million Santa Monica beach house, despite his having a record that includes arrests and allegations of drug use.
The story also reported that OneUnited had failed a federally required test for lending in low-income neighborhoods in Florida. Critics quoted in the story said the bank was a weak performer and had abandoned its stated mission to serve inner-city customers.
Cohee, a Harvard Law School graduate, has been chief executive of OneUnited, one of the nation’s largest African American banks, since 1996. His wife, a Harvard MBA, is its president. Five of its 10 branches are in Southern California. The bank also has operations in Florida and Massachusetts.
Cohee was arrested twice in 2007 at the Santa Monica beach house, once on suspicion of sexual assault and three weeks later on suspicion of possession of cocaine and cannabis concentrate.
In the assault case, Cohee denied a woman’s accusation that he forcibly sodomized her at the home during what began as consensual sex. That case was “unequivocally dropped,” he said Thursday. “There was never a charge filed.”
A large police squad served a search warrant three weeks later as part of the assault investigation. A police report said Cohee was with a woman in the second-story master bedroom, where police found more than 4 grams of rock cocaine, a third of a gram of powder cocaine and 3 grams of a marijuana concentrate.
Cohee told The Times on Thursday that the drugs were “small residual amounts” and didn’t belong to him. He said the beach house had been a rental before he took up residence in 2006.
“We moved into a fully furnished house that had been leased to multiple people,” he said. “There was all kinds of nooks and crannies in the house, and all kind of stuff that remained there” from previous occupants.
Cohee said that without entering a plea to the drug charges, he had the case dropped by enrolling in drug-counseling classes “as an expedient.”
“In order to get this thing to go away I said I’ll go to those classes,” he said. “The reality is that both cases were flat-out dropped. I have no criminal record related to either one, period.”
The bank initially paid $26,500 a month to rent the home from Max Weinberg, the longtime drummer in Bruce Springsteen’s E Street Band and formerly of “Late Night with Conan O’Brien,” according to court records. But when a dispute arose, Weinberg filed an eviction notice against the bank and Cohee. The dispute ended in December 2006 when the bank set up a limited liability company to buy the house for $6.4 million, property records show.
Such a purchase is unusual for a small community bank. But Cohee said that OneUnited provided personal banking for many top black entertainers and that it needed a suitable place to hold events and to meet with them. He said all of the bank’s executives were given use of the house, and that about 20 other employees had stayed there when they were visiting Los Angeles.
He said the cars that the bank leased for six top executives, including his Porsche Cayenne, were also legitimate business expenses, and that the vehicles were used to transport bank employees to presentations and meetings with clients. The perks were no more than those enjoyed by executives at similarly sized banks, he said.
After OneUnited lost more than $50 million on its investments in securities from mortgage companies Fannie Mae and Freddie Mac in 2008, regulators had the bank sign a pledge to raise capital, improve its management and loan practices, quit paying for the beach house and sell the cars.
Cohee, who said he continues to divide his time between Boston and Los Angeles, characterized the house and cars as reflecting a “pre-recession reality.” They have been sold, he said.
Cohee acknowledged that OneUnited had not made many home loans in some communities it serves. He said the bank decided it was more prudent to develop a specialty in apartment loans. Most of those loans have been to African American landlords in the inner city, he said. “Affordable housing is a very important component of the development of any community.”
He noted that his community lending rating from the Federal Deposit Insurance Corp., though “noncompliant” in Florida, is “outstanding” in California. And he disputed claims that he had been gathering deposits in the Miami area to invest elsewhere, saying that as of the end of June, OneUnited had $18.3 million in deposits and $24.8 million in loans in Florida.
Cohee has had to shrink his bank to preserve capital over the last year; OneUnited’s assets, once more than $700 million, had fallen to about $530 million at the end of June. Despite recording a small loss for the first half of this year, OneUnited is returning to profitability, he said.
Talks with private investors are expected to lead to an investment of $50 million to $100 million, making OneUnited, now considered only “adequately capitalized,” strong and ready for a new growth spurt, he said.
Cohee said the bank’s board had discussed, “and continues to discuss,” his future as its leader. “To this point, fortunately, they are behind us,” he said.
Times staff writer Stuart Pfeifer contributed to this report.