|Executives of a New Jersey bank have been indicted as part of a federal probe into corruption at Philadelphia City Hall -- leaving shares of the company's stock lower.
Commerce Bancorp president Glenn K. Holck, 44, and Stephen M. Umbrell, 44, a regional vice president, are facing conspiracy charges in U.S. District Court in the Eastern District of Philadelphia.
The pair is accused of making sweetheart mortgage loans to Corey Kemp, Philadelphia's former city treasurer, in return for getting up to $30 million of the city's business, according to a written statement from the U.S. Attorney's office in Philadelphia.
Kemp, Holck and Umbrell were among 12 people who were charged in the two-year federal probe.
Kemp faces nearly 50 charges of conspiracy, wire fraud, mail fraud, extortion, money laundering, bank fraud and income tax fraud. He faces 798 years in prison and $10.75 million in fines, according to the statement.
"There was a seemingly endless stream of benefits in exchange for control that Kemp was more than willing to surrender," U.S. Attorney Patrick Meehan said in the statement. "In effect, the public trust was being bought and sold."
Holck was charged with conspiracy to commit honest services fraud, eight counts of wire fraud and one count of mail fraud. He faces 185 years in prison and a $2.5 million fine.
Umbrell faces the same charges and punishment, prosecutors said.
Both entered innocent pleas. Their lawyers could not be reached to comment but professed their clients' innocence in a story published by the Reuters news service.
"I have been a criminal defense lawyer for 20 years, and I have never been so confident of my client's innocence," Lawrence Lustberg, Umbrell's lawyer, reportedly told Reuters.
Holck's lawyer, Kevin Marino, called the charges "outrageous" and said the indictment was "full of falsehoods and half-truths," according to the story.
Marino also reportedly said Kemp's loan was a high-interest subprime loan and that the arrangement posed no conflict of interest.
The indictment alleges that Kemp steered business to firms favored by Ronald White, a lawyer and supporter of Philadelphia Mayor John Street. White was also indicted in the probe.
"One of the firms that benefited from White's and Kemp's corrupt scheme was Commerce Bank," prosecutors said in the statement.
Prosecutors allege that Holck and Umbrell "made favorable and otherwise unavailable loans to Kemp, such as 100 percent financing on his house at a time that Kemp had extremely poor credit."
"As a result, Kemp favored Commerce Bank in the award of a $30 million line of credit and other transactions," prosecutors allege.
Kemp and White allegedly talked of how Holck and Umbrell how to win the city's business, a conservation investigators caught through listening devices and wiretaps.
"Tell them don't submit (the bid) first, because I can tell you what came in, and then you can tell them how to beat the s***," Kemp allegedly told White, according to prosecutors.
After reviewing other bids, Kemp told Holck and Umbrell what offer would land the city's business, prosecutors said.
Commerce Bancorp is based across the Delaware River from Philadelphia in suburban Cherry Hill, N.J.
Bank spokesman David Flaherty did not return a phone call to comment.
The bank issued a written statement saying that the two executives have been suspended and that the investigation "will have no material negative financial impact on the company."
The bank's stock, however, has dropped more than $7 from $61.15 since the indictments were announced.
The bank also disputed reports that the indictment is part of a larger investigation by federal authorities into the bank -- which according to past news stories, fashions itself in the mode of trendy retailers like Starbucks coffee rather than a stodgy financial institution. It goes so far as to call its branches "stores."
"The company has confirmed that neither it, nor any of its subsidiaries or other officers and employees are targets of the investigation," the bank said. "The company has fully cooperated with this investigation."
Commerce reports assets of $26 billion and 300 "stores" in New Jersey, Pennsylvania, Delaware and New York.
CEO and Founder Vernon Hill is active politically, giving $8,200 to mainly Republican candidates, according to Federal Election Commission online records.
The bank also established a Political Action Committee, or PAC.