In 2010, the First National Bank of Savannah went under. Now, federal prosecutors are blaming the bank's president and six other bank officials for the institution's misfortune.

The group of bank officials face charges of conspiracy and fraud, which could land them behind bars for decades. Potential fines against each official could exceed $1 million. The Federal Deposit Insurance Corporation (FDIC) took over the bank in 2010 and sold it over to Savannah Bank, but not before first taking a $90 million hit.

The bank officials were indicted early this year, accused of issuing fraudulent loans. They are also accused of striking deals that would offer the borrower extremely favorable terms, but only if they agreed to take on some of the bad loans.

The indictment goes on to claim that management at the bank doctored documents in 2009 when they were being reviewed by the Office of the Comptroller of the Currency in order to hide any signs of wrongful behavior.

During the mid-2000s, the bank appeared to be more generous with their loans. In 2004, the institution had issued $40 million in loans, and just four years later, that total jumped to $200 million. Prosecutors alleged that many of these loans were reckless in nature.

They then tried to pawn the loans off on banks and real estate developers, offering them loans with favorable terms as long as they took on some of the bad ones. The defendants in the case are expected to appear in court in the coming month.

People and law enforcement tend to point the finger when an organization falls on tough financial times. The truth is, there is risk tied in with investing and issuing loans. The bank's president and high-ranking officials may not have acted wrongly. However, with federal investigators launching an extensive investigation into the matter, there might be too much incriminating evidence and the defendants might find it in their best interests to plead guilty to the offenses.

Source: American Banker, "Management of a Failed Georgia Bank Charged with Fraud," Chris Cumming, Jan. 14, 2013