Failed Bank’s COO Sentenced to 8 Years in Prison

The former chief operating officer and chief credit officer of a California-based bank that went bust must spend more than eight years in prison, a federal judge ruled Tuesday.

Ebrahim Shabudin, 66 years old, had been convicted of seven federal fraud charges following the 2009 collapse of United Commercial Bank. Prosecutors accused Mr. Shabudin of orchestrating an elaborate scheme to hide the bank’s troubled finances, including securing more than $300 million in federal bailout funds that were lost when the bank failed in 2009. Its assets were sold to another bank, and its parent filed for bankruptcy liquidation.

Specifically, Mr. Shabudin was accused of falsifying bank records to hide millions of dollars in losses and shore up the bank’s reputation during the height of the financial crisis. After a six-week trial, a jury in March found him guilty of securities fraud and six other charges.

Christy Romero, watchdog for the federal bailout program, called the case “the most significant prosecution” of crimes tied to the bailout.

In addition to the 97-month prison sentence handed down by U.S. District Court Judge Jeffrey S. White, Mr. Shabudin also faces three years’ supervised release and forfeiture of $348,000. He is expected to begin serving his prison sentence in November.

Other UCB officials have yet to face sentencing for their roles in the fraud. The bank’s former chief financial officer and ex-senior vice president last year each pleaded guilty to one conspiracy count.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter at @PalankJ