Wilmington Trust Settles With Prosecutors in Bank Fraud Case - WBOC-TV 16, Delmarvas News Leader, FOX 21 -

Wilmington Trust Settles With Prosecutors in Bank Fraud Case

Posted: 10/10/2017 14:14:00 -04:00 Updated:

By RANDALL CHASE
Associated Press

WILMINGTON, Del. (AP)- Wilmington Trust Corp., the first financial institution to be criminally charged in connection with the federal bank bailout program, reached a $60 million settlement with prosecutors Tuesday just as the corporation and four former top executives were set to go to trial on bank fraud charges.

The agreement includes a civil forfeiture of $44 million and $16 million previously paid by Wilmington Trust to the Securities and Exchange Commission in a related lawsuit.

"In return, this office has agreed to dismiss criminal charges against the bank," said acting U.S. Attorney David Weiss.

U.S. District Court Judge Richard Andrews postponed the trial for the former executives until March.

"The bank being removed from the case has really upset the strategy and planning and preparation for the other defendants," Andrews said. "It's my judgment that they're not prepared to try the case without the bank as a co-defendant."

Parent company M&T Bank said in a statement that resolving the matter was in the best interest of the company.

While the bank did not admit liability, Weiss said Wilmington Trust had accepted responsibility for its actions, and that the $44 million forfeiture represents proceeds that can be traced to "unlawful activity."

"If possible, we wanted to avoid the collateral consequences of a criminal conviction for the bank, which could have resulted in a loss of further jobs and revenue to the state of Delaware" Weiss added, noting that Wilmington Trust still operates a wealth advisory business, whose clients include high-net worth individuals.

"A criminal conviction could have an impact on Wilmington Trust's ability to continue to function in that wealth advisory business," he said.

Wilmington Trust, a century-old institution founded by members of the DuPont family, was hastily sold in 2011 to M&T Bank at a steep discount as it teetered on the edge of collapse. The bank imploded despite receiving $330 million from the federal government's Troubled Asset Relief Program.

Prosecutors accused Wilmington Trust, through its senior executives, of concealing the truth about the bank's deteriorating commercial real estate loan portfolio from bank regulators, investors and the Securities and Exchange Commission.

Former Wilmington Trust president Robert V.A. Harra Jr., former chief financial officer David Gibson, former chief credit officer William North, and former controller Kevyn Rakowski are charged with fraud, conspiracy and making false statements to federal regulators.

Three other former Wilmington Trust officers, vice president Joseph Terranova, Delaware Market Officer Brian Bailey, and loan officer Pete Hayes have pleaded guilty in the case and are awaiting sentencing.

Two other coconspirators already have been sentenced. James Ladio, former CEO of MidCoast Community Bank, was sentenced to two years in prison and ordered to pay $700,000 restitution. Businessman Salvatore Leone was sentenced to a year and a day in prison and ordered to pay $784,000.

Michael Zimmerman, a Dover developer, died in 2015 while awaiting trial on charges of conspiracy, money laundering and making false statements to a financial institution. Prosecutors said Leone conspired with Zimmerman to submit fraudulent requests to Wilmington Trust to draw on construction loans, and that they then used the money for unrelated purposes. Prosecutors also said Leone and Zimmerman kept project-related funds for personal use.

"Send $1,000,000 ASAP I have to pay my bar tab," Zimmerman demanded in a 2008 fax to Wilmington Trust that was referenced in a government affidavit.

Prosecutors have alleged that Wilmington Trust concealed the total quantity of past due loans on its books from October 2009 through November 2010. They say Wilmington Trust failed to disclose to regulators its practice of "waiving" matured loans designated as current for interest and in the process of being extended from the reporting requirements for past due loans. An indictment cites several emails, dating as far back 2007, in which North expressed concerns about the amount of loans being waived from the reporting requirements.

According to the indictment, Wilmington Trust officials reported only $10.8 million in commercial loans 90 days or more past due at the end of 2009, concealing more than $333 million in past due loans subject to the waiver practice.

During the course of the alleged conspiracy, in February 2010, Wilmington Trust raised about $274 million through a public stock offering. The bank is the defendant in a separate class-action lawsuit by investors.

Weiss said plaintiffs in the lawsuit also will be the beneficiaries of the funds forfeited in settling the criminal case.

  • Delmarvawide NewsDelmarvawide NewsMore>>

  • Route 589 Reopened in Worcester County

    Route 589 Reopened in Worcester County

    Tuesday, October 23 2018 12:01 AM EDT2018-10-23 04:01:48 GMT
    Tuesday, October 23 2018 12:01 AM EDT2018-10-23 04:01:48 GMT
    OCEAN PINES, Md.- A major road has been reopened in Worcester County, six weeks earlier than expected.More
    OCEAN PINES, Md.- A major road has been reopened in Worcester County, six weeks earlier than expected.More
  • Weather Impacts Local Farmers

    Weather Impacts Local Farmers

    Monday, October 22 2018 10:49 PM EDT2018-10-23 02:49:46 GMT
    Monday, October 22 2018 10:49 PM EDT2018-10-23 02:49:46 GMT
    After weeks of downpour, farmers may now receive financial assistance.After weeks of downpour, farmers may now receive financial assistance.
    After weeks of downpour, farmers may now receive financial assistance.After weeks of downpour, farmers may now receive financial assistance.
    We've experienced some wet weather this season and while you may think that's good for farm land...it's not. Many farmers say the rain has actually been too much for their crops.More
    We've experienced some wet weather this season and while you may think that's good for farm land...it's not. Many farmers say the rain has actually been too much for their crops. More
  • How A Medical Simulation Center Helps Rising Need for Nurses

    How A Medical Simulation Center Helps Rising Need for Nurses

    Monday, October 22 2018 6:49 PM EDT2018-10-22 22:49:31 GMT
    Monday, October 22 2018 6:49 PM EDT2018-10-22 22:49:31 GMT
    As the need for nurses rises in the U.S., Salisbury University is ahead of the curve.More
    As the need for nurses rises in the U.S., Salisbury University is ahead of the curve. More
  • Most Popular StoriesMost Popular StoriesMore>>

  • Halloween Age Limit For Trick-Or-Treaters

    Halloween Age Limit For Trick-Or-Treaters

    Monday, October 22 2018 4:35 PM EDT2018-10-22 20:35:08 GMT
    Monday, October 22 2018 4:35 PM EDT2018-10-22 20:35:08 GMT
    Halloween is nearly a week away and parents and kids are gearing up for the big day. But town and city officials throughout Sussex County are encouraging that only kids under twelve participate in trick-or-treating to increase safety.More
    Halloween is nearly a week away and parents and kids are gearing up for the big day. But town and city officials throughout Sussex County are encouraging that only kids under twelve participate in trick-or-treating to increase safety.More
  • Defense Says Witness Played Major Role in Prison Riot

    Defense Says Witness Played Major Role in Prison Riot

    Monday, October 22 2018 6:12 PM EDT2018-10-22 22:12:35 GMT
    Monday, October 22 2018 6:12 PM EDT2018-10-22 22:12:35 GMT
    Aerial view of the James T. Vaughn Correctional Center in Smyrna. (Photo: WBOC Chopper 16)Aerial view of the James T. Vaughn Correctional Center in Smyrna. (Photo: WBOC Chopper 16)
    Aerial view of the James T. Vaughn Correctional Center in Smyrna. (Photo: WBOC Chopper 16)Aerial view of the James T. Vaughn Correctional Center in Smyrna. (Photo: WBOC Chopper 16)
    he star prosecution witness in the trial of four Delaware inmates charged with murder, kidnapping and other crimes after a fatal prison riot played a key role in the disturbance and...More
    he star prosecution witness in the trial of four Delaware inmates charged with murder, kidnapping and other crimes after a fatal prison riot played a key role in the disturbance and...More
  • Clayton Police Chief Avoids Jail Time After DUI Arrest

    Clayton Police Chief Avoids Jail Time After DUI Arrest

    Monday, October 22 2018 4:18 PM EDT2018-10-22 20:18:14 GMT
    Monday, October 22 2018 4:18 PM EDT2018-10-22 20:18:24 GMT
    A police chief in Kent County will avoid jail time, after being charged with DUI.More
    A police chief in Kent County will avoid jail time, after being charged with DUI.More
  • Most Popular VideosMost Popular VideosMore>>

  • Weather Impacts Local Farmers

    Weather Impacts Local Farmers

    We've experienced some wet weather this season and while you may think that's good for farm land...it's not. Many farmers say the rain has actually been too much for their crops.

    More

    We've experienced some wet weather this season and while you may think that's good for farm land...it's not. Many farmers say the rain has actually been too much for their crops.

    More
  • Trial Begins for Inmates in Deadly Delaware Prison Riot

    Trial Begins for Inmates in Deadly Delaware Prison Riot

    The star prosecution witness in the trial of four Delaware inmates charged with murder, kidnapping and other crimes following a deadly prison riot last year played a key role in the disturbance and likely ordered the killing of a prison guard, a defense attorney claimed during opening statements Monday.

    More

    The star prosecution witness in the trial of four Delaware inmates charged with murder, kidnapping and other crimes following a deadly prison riot last year played a key role in the disturbance and likely ordered the killing of a prison guard, a defense attorney claimed during opening statements Monday.

    More
  • Halloween Age Limit For Trick-Or-Treaters

    Halloween Age Limit For Trick-Or-Treaters

    Halloween is nearly a week away and parents and kids are gearing up for the big day. But town and city officials throughout Sussex County are encouraging that only kids under twelve participate in trick-or-treating to increase safety among children. Cities like Seaford, Georgetown, Blades, even the town of Delmar said they all have these age limits in place. 

    More

    Halloween is nearly a week away and parents and kids are gearing up for the big day. But town and city officials throughout Sussex County are encouraging that only kids under twelve participate in trick-or-treating to increase safety among children. Cities like Seaford, Georgetown, Blades, even the town of Delmar said they all have these age limits in place. 

    More
Powered by Frankly

All content © Copyright 2000 - 2018 WBOC. All Rights Reserved. For more information on this site, please read our Privacy Policy, and Terms of Service, and Ad Choices