FUSB reports $3.8 million in fraud at loan company
From Staff Reports

United Security Bancshares Inc., announced late last week that it was investigating an estimated $3.8 million in "irregularities in certain loan transactions within Acceptance Loan Company," including fraudulent loans.

Acceptance is a subsidiary of First United Security Bank in Thomasville and United Security Bancshares is a Delaware-based holding company over FUSB, with its corporate offices in Thomasville.

In a statement released late last week, the bank said:

"The irregularities appear to be primarily limited to two ALC branches and largely related to the making of improper or fraudulent loans and the improper or fraudulent handling of repossessed automobiles. The Company has initiated an internal investigation with the assistance of outside legal counsel, as well as an outside forensic accountant. At this time the Company has not completed its review of the financial impact of the irregularities, or the extent to which any losses will be covered by insurance or recoverable in a civil action. At this point of the investigation, the Company has identified approximately $3.8 million of potential losses. The Company is also assessing potential additional losses from loans where potential delinquencies have not been identified due to the irregularities. Upon discovering the irregularities, the Company discussed the matter with its independent auditors and notified the Chairman of its Audit Committee."

The Company's President and Chief Executive Officer, R. Terry Phillips, said, "I want to assure our shareholders that we are taking this matter extremely seriously and are working diligently, along with outside experts, to perform a full and complete investigation. We are committed to meeting the highest standards in all aspects of our business and remain focused on providing our customers with quality products and services and the highest level of customer service. We have taken appropriate actions at the identified ALC branches in question to ensure that these activities have ceased."

When reached by the Times, Phillips had little to add to the statement. Phillips did say the investigation began sometime in May, but would not say how the matter came to the attention of bank officials.

According to Hoover's, a business information web site, Acceptance Loan has about two dozen offices in Alabama and Mississippi. FUSB had a total revenue of $45.1 million for the year ending December 2006.

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