..... State Street spokeswoman Carolyn Cichon said the company had been surprised by the recent string of controversies surrounding OneUnited. “We had absolutely no knowledge of any of the allegations when we gave our investment,’’ she said. She was referring both to the ethics charges against US Representative Maxine Waters for helping OneUnited gain access to Treasury officials while her husband owned stock in the bank — and to media reports yesterday that OneUnited’s chief executive, Kevin Cohee, had faced drug and assault arrests in California. State Street declined to comment on OneUnited or Cohee but said its support for the institution had not changed. None of the other OneUnited directors contacted yesterday returned calls seeking interviews.
Cohee, who has been on vacation and generally unavailable for the past two weeks as his bank was making national headlines, yesterday agreed to a lengthy interview, in which he defended his personal behavior and his bank’s reputation. He said the charges were dropped in the two arrests in a Santa Monica mansion the bank used to lease for him and insisted that he did nothing wrong.
According to the police reports, Cohee was arrested in April 2007 for sexual assault after an encounter with a woman other than his wife, who is president of OneUnited and serves on its board. A few weeks later, 17 police officers and detectives with a search warrant went to the mansion to investigate the assault claim. After a maid let them in, they found Cohee in the master bedroom, and a desk drawer full of cocaine, pipes, and other drugs.
Prosecutors dropped the assault allegations but not the drug charges. Cohee agreed to attend 12 of what he called “drug classes’’ in exchange for the charges being dismissed. He thought the deal would resolve the arrest quietly.
“That’s not what happened here,’’ Cohee said. “We made the decision as an expedient that I would go to these classes, ironically to avoid going to a trial. We certainly believe that we would have won the trial,’’ he said, but he had hoped to avoid the publicity. “I handled a difficult situation in the best way that I thought I could handle it at the time.’’ .....
No sooner did Cohee finish dealing with his legal problems, his bank was flailing. In August 2008, the bank lost $50 million when the federal government took over the sputtering Fannie Mae and Freddie Mac mortgage agencies.
That September, the bank was asking Representative Waters for a meeting with the Treasury to ask for bailout money. By October, the bank was slapped with a cease-and-desist order by federal and state banking regulators for poor loan documentation and high pay and perks for executives.
Still, State Street came through with the $17 million. And in December, OneUnited got $12 million from the Treasury, as part of the $700 billion Troubled Asset Relief Program. Waters and US Representative Barney Frank both say they did not know about Cohee’s arrests in California. .....
Frank, a Newton Democrat who runs the House Financial Services Committee, helped author the bill that enabled OneUnited and banks like it to get bailout funds. But yesterday he appeared to distance himself from the troubled bank. “I never told any regulator I wanted OneUnited or any other bank to get TARP money,’’ he said, adding, “At no point have I ever suggested any withholding of full regulatory scrutiny.’’
Meanwhile, OneUnited has made only one quarterly dividend payment on its TARP funds, because it’s still struggling financially. The bank lost $283,000 in the second quarter and set no money aside for loan losses, even though its nonperforming loans continue to grow. .....
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