By Kirsten Valle
kvalle@charlotteobserver.com

Investigators have charged a former BB&T executive with criminal bank fraud, saying he overpaid a contractor and accepted thousands of dollars in illegal kickbacks in return.

Prosecutors with the U.S. Attorney’s office in Charlotte say Chester Williams, an executive vice president at the bank, paid contractor and longtime acquaintance Samuel Foster more than double his fee – and then accepted more than $100,000 from him to alleviate his own financial hardship. Investigators have also charged Foster with bank fraud and submitting a false tax return.

Foster’s attorney, Clarence Davis of Columbia, S.C., said Williams “had some personal isues,” and Foster made some loans to him, as a friend. At the time of the loans, he had a consulting agreement with the bank, Davis said.

“Chester has accepted responsibility for his involvement, is extremely remorseful and has assisted the government in every way possible,” said Missy Owen, Williams’ attorney.

Williams has not worked at the bank since November 2007, a BB&T spokesman said.

Williams managed a program at BB&T that paid third-party contractors to seek lending opportunities from businesses considering buying properties in economically depressed areas, according to charges filed in federal court Monday. He hired Foster, a partner in a real-estate development company, in 2003 to identify lending opportunities.

In 2006, Williams found himself in “serious financial difficulty,” and after discussing the problem with Foster, agreed to double his monthly payments to $15,000 if the contractor would kick back some of the money to Williams, according to the charges. The contractor did no extra work that would support doubling the contract amount, prosecutors allege.

Williams concealed the payments from the bank’s records, and the IRS was not aware of Foster’s extra income, the charges say.

In June 2006, Williams approved the contract to be increased to $20,000 per month, “for no purpose other than to allow both Williams and Foster to reap the benefits of their illicit arrangement,” according to the charges. That year, the contractor received a total of $247,000 from the bank and kicked back $47,500 of it to Williams.

BB&T paid Foster a total of $196,000 in 2007, and he kicked back $55,000 to Williams, prosecutors allege.

After the federal investigation began, the contractor filed his 2007 federal income tax return and reported all payments from BB&T, including the money he’d paid back to Williams.

Federal authorities accused Williams of bank fraud and submitting a false tax return, saying he “knowingly and unlawfully executed and attempted to execute a scheme … to defraud BB&T.”

A plea hearing is scheduled for July 20 in U.S. District Court in Charlotte. Staff researcher Maria David contributed.

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