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Cohee at OneUnited, bank in Maxine Waters case, has checkered record

The House ethics committee announced that Rep. Maxine Waters (D-Calif.) will face trial for her role in steering federal funds to a bank to which she is personally connected. She denies any wrongdoing. Her career in photos:

At the time, Waters was the senior Democrat on the House Financial Services subcommittee on financial institutions, and her husband had a checking account valued at $250,000 to $500,000 in Cohee's bank, as well as a home mortgage and a line of credit. Her financial disclosure for 2001 does not list income from the account -- because of a clerical error, an aide said -- and her 2002 statement lists unspecified interest income. Such a large account would be partly at risk only if Cohee's bank failed.

When Cohee and his co-investors bought the bank in August 2002, Waters told the American Banker newspaper that it was "a giant step forward for minority banks everywhere."

'Professional and social' friend

Waters has described herself as a "professional and social" friend of Cohee's, though at the time he sought her assistance in 2008 she apparently had no idea that his personal life was troubled or that he had a record of adverse court cases related to his finances.

In 1991, for example, a judge in New Jersey approved a $1.8 million payment to his co-investors in a credit card company Cohee controlled, settling a breach-of-contract lawsuit they had filed. In 1992, seven years after he graduated from Harvard, a court in New York entered a $23,493 judgment against him, according to public records that list Cohee as a debtor and the university as a creditor. Harvard's public relations office said it could not find records explaining its litigation.

Weeks before his meeting with Treasury officials in 2008, Cohee was also dealing with the consequences of the arrests at the Santa Monica mansion, according to police and court records obtained by The Washington Post. The first arrest, on April 22, 2007, occurred after a woman who was not his wife fled the mansion and drove to a police station to lodge a complaint of violent sexual assault.

The second arrest, on May 15, 2007, involved 17 police officers and resulted from drugs found during the execution of a search warrant "in regards to a sodomy investigation," according to a police report. When they reached the second floor of the house and asked Cohee to come out of the bedroom with his hands up, the door was instead pushed shut. Police kicked it open and found a woman, as well as cocaine and a black tar-like substance in a desk drawer, the report states. It was later determined to be concentrated cannabis, according to court records.

(Read the police report)

Prosecutors did not pursue the assault charge, but Superior Court Judge James R. Dabney declined to grant a motion by Cohee to dismiss the drug charges. He agreed instead to drop them after Cohee completed 12 meetings of Narcotics Anonymous, a typical outcome in California for a first-time charge of drug possession, Dabney said in a telephone interview. He said he was unaware at the time that Cohee was a bank chief executive and a lawyer. "I would have remembered that," he said.

Cohee never mentioned the arrest or treatment program to Waters, according to her chief of staff, Mikael Moore, who is also her grandson.

In a brief interview on his cellphone Tuesday, Cohee denied that he had been arrested in California. "You clearly have me confused with someone," he said before ending the call.

But the Social Security number and birthday in public data connected to his home address in Boston match the Social Security number in California police records of Kevin Lafate Cohee's arrests. The arrest occurred at a residence leased by the bank and then purchased by a limited liability corporation controlled by Cohee and his wife. And one of the police reports lists Cohee's home town of Kansas City, Mo., and the same cellphone number Cohee answered on Tuesday.

Robert Patrick Cooper, the bank's counsel, released a statement in the bank's name stating that "it is essential to reiterate and make clear that Mr. Cohee has no criminal record; the spurious claims from 2007 were reviewed fully by a court which found the allegations to be baseless and without merit." He also said the "leased housing where Mr. Cohee resided was fully furnished and contained . . . personal possessions of others [including] when it was subsequently purchased." He added that Cohee "has fulfilled all of his financial obligations."

Court records show that after Dabney disposed of the case in July 2008, Cohee's arrest record was forwarded to the Justice Department. But that had no impact on his ability to remain an officer for OneUnited.

Although federal regulators can bar banks from employing officers who commit certain misdemeanors or felonies or who engage in a "breach of trust" demonstrating personal dishonesty, they do not restrict the employment of those charged with narcotics possession or who enter pretrial treatment programs, said David Barr, a spokesman for the Federal Deposit Insurance Corp.

The FDIC's action against OneUnited in fall 2008 was instead based on an audit. Besides ordering the bank to stop paying expenses at the Santa Monica house, take away Cohee's car and enforce a written policy barring "reimbursement of personal expenses of the Bank's directors, officers, and employees," it faulted the bank for "operating without effective underwriting standards and practices . . . engaging in speculative investment practices . . . [and] committing violations of law and regulations."

Using a chit

Days after hearing Cohee's appeal for help at her House office in late August 2008, Waters dialed Treasury Secretary Henry M. Paulson Jr. She told him that "some people" she considered important needed to meet with his top aides, who were overwhelmed by the distractions of a crumbling national economy. "You don't use your chits for nothing, you call when there is an important issue," Waters explained later.

More than a dozen top Treasury officials attended the nearly hour-long meeting on Sept. 10. Waters has said she was only trying to help the National Bankers Association, a trade group of banks owned by minorities and women. But five members of the board of the Office of Congressional Ethics -- a group of mostly former congressmen -- said in their 107-page report this month that this contention is implausible, partly because no other member of the association was invited.

Treasury's response was that it had no legal authority to give OneUnited the $50 million that House investigators said Cooper and Cohee requested at the meeting. Nevertheless, Moore later sent an e-mail to Frank's staff warning that OneUnited was in trouble. Moore also exchanged e-mails with Cohee containing draft Treasury language for legislation granting the department authority to help all banks, he said.

The TARP bill that President George W. Bush signed on Oct. 3, 2008, included the provision Frank inserted into the bill to help OneUnited and other minority-owned banks harmed by the stock devaluation at Fannie Mae and Freddie Mac. "We were very clear we wanted them to be eligible," Frank said in an interview, speaking about OneUnited. But he said that it was up to regulators to decide whether to give the money.

A subsidiary issue at Waters's forthcoming House trial may be whether Treasury improperly allowed its decision-making to become tainted by political pressure, from Frank as well as Waters. Frank told House investigators that Waters openly worried about assisting the bank because of her husband's past service on its board, and that he told her to steer clear because he planned to take up its cause.

"I had independently heard from people in Massachusetts about it; it was not like a handoff," Frank said in an interview. He did not know about Cohee's arrests, an aide said.

The Treasury Department has said that its grant, the first given to a minority-owned bank under the Troubled Assets Relief Program, was based on sound, normal criteria. But at the time, OneUnited had a uniquely poor ratio of loans to debts, according to data compiled by American University researchers who combed through records of all 987 banks that received TARP money between October 2008 and October 2009. A senior Treasury official said in an interview that it was up to the FDIC to vet the conduct or trustworthiness of officers at banks that apply for money and that Treasury has "no particular rules or regulations" about such matters even though it makes the final decisions on TARP awards.

Treasury Department e-mails about OneUnited make clear that officials there were convinced in any case that Waters and Frank were "interested" in assisting the bank, as one wrote to a colleague. After the bank was told that the money was coming, Waters and Frank told Paulson in a letter that "we applaud the recent decision" to help minority-owned banks "on advantaged terms."

Research editor Alice Crites contributed to this report.

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