Two former bank chiefs have admitted to crimes while running their respective institutions — one which has since failed. One of the CEOs had purchased a yacht which he planned to use to escape to Panama. Other financial institution executives face criminal trials over an array of alleged crimes against their employers. And the list of defendants is likely to grow thanks to a new government effort.
On Monday, the Justice Department announced the Obama administration’s Operation Broken Trust, which is targeting investment fraud. The operation has yielded enforcement actions against 343 criminal defendants and 189 civil defendants so far involving more than $8.3 billion in losses to more than 120,000 investors.
Another Department of Justice news release indicated Charles J. Antonucci Sr., the former president and chief executive officer of The Park Avenue Bank, pled guilty to multiple criminal charges in October. Antonucci admitted to securities fraud and attempting to fraudulently obtain $11,252,480 from the Troubled Asset Relief Program. It was the first-ever TARP conviction. He also admitted to bribery, embezzlement of bank funds and participating in a $37.5 million scheme that left an Oklahoma insurance company in receivership.
From 2004 until 2009, Antonucci headed New York-based Park Avenue — which had more than $520 million in assets. He misled bank regulators by misrepresenting the source of the $6.5 million he claimed to have personally invested to recapitalize the bank when, in fact, he borrowed it from the bank. Based on his fake investment, Antonucci attempted obtain more than $11 million in TARP funds.
The bank failed on March 12, and Antonucci was arrested three days later.
The former president and CEO of Countryside Bank pled guilty also in October to stealing $1 million from the Meriden, Kan.-based bank, the Department of Justice reported. Scott D. Becker admitted to operating the scheme from 1999 until he was terminated in 2003 after the Kansas Banking Commission determined the bank had a negative net worth.
The government claims that Becker used a series of legal entities he created — including Countryside Mortgage LLC — to siphon the funds from the bank, formerly known as Meriden State Bank. After he was terminated and learned of an investigation being conducted by the Federal Bureau of Investigation, he “developed a scheme to systematically liquidate, transfer and conceal his assets in an effort to prevent creditors and the government from taking them.”
Becker allegedly purchased a corporation in Panama to park the illicit funds and bought a 42-foot yacht, “Pearls and Boots,” that he planned to abscond from the United States on. He faces a Dec. 20 sentencing.
Frederick D. Berg was arrested in Los Angeles on Oct. 21 after being charged with wire fraud, money laundering and bankruptcy fraud, according to a Justice Department announcement. Berg founded the Meridian Group of mortgage investment funds, an alleged Ponzi scheme that cost more than a thousand investors over $100 million.
Berg is accused of concealing from the bankruptcy trustee bank accounts, a property sale and around $400,000 that belongs to his personal bankruptcy estate.
A federal grand jury in Phoenix returned a 68-count indictment against William Liddle, Rhonda Liddle and Frank Ruiz, according to the U.S. Department of Justice. The government claims that Liddle, who was a vice president for AEA Federal Credit Union, took $1 million in kickbacks from Ruiz in return for approving suspicious business loans. Liddle’s wife, Rhonda, also allegedly received some of the money.
The Justice department said all of the businesses funded by the loans ended up bankrupt, more than $25 million in mortgages approved during the conspiracy are in default and all three defendants have declared personal bankruptcy.
In New York, Mario S. Levis, who is also known as Sammy Levis, was sentenced to 60 months in prison by a judge in U.S. District Court for the Southern District of New York, a Department of Justice announcement indicated. Levis was found guilty in April of defrauding investors in the stock of his employer, Doral Financial Corp.
As Treasurer at Puerto Rico-based Doral, Levis allegedly misrepresented interest-only strips between 2001 and 2005. Doral’s market capital sank $4 billion as a result the scheme.
A 15-year sentence was handed down in October to former Florida mortgage broker Peter Bakowski, a press release from the U.S. Attorney’s Office in Florida said. He was also ordered to pay $16 million in restitution.
The government accuses Bakowski of operating a secondary scheme where more than one investor was sold the same loan. In all, more than 30 investors were victimized by the scheme, which involved over 150 properties.
Mortgage broker John A. Sanzone Sr. pled guilty to mortgage fraud in September, according to the State of New York Banking Department. Sanzone, who operate through his company Catskill Mortgage, faces a sentence of one to three years.
On July 29, the U.S. Attorney for the Middle District of Alabama, announced that Reba Glover Scott pled guilty to stealing more than $57,809 from her employer, Regions Bank. Between July 2006 and December 2008, Scott allegedly made deposits to her personal accounts while simultaneously causing debits to be posted to certain Regions general ledger accounts.
Last month, Scott was sentenced to six months in prison, the Dothan Eagle reported.
Scott D. Farah was expected to plead guilty to federal wire and mail fraud charges in exchange for a nearly 20-year sentence, NECN reported. The SEC in April filed a complaint in U.S. District Court for the District of New Hampshire alleging securities laws violations that caused $20 million in losses to 150 investors.
In October, the Justice Department announced that Jean Teresa Hoffert was charged with 14 counts of mail fraud. Hoffert, a former settlement agent, allegedly stole proceeds from mortgage loan closings that were intended to payoff existing liens. She concealed the scheme, which she ran from 2005 to 2008, by continuing to make payments to the unpaid lenders and directing mortgage statements and mail a secret post office box that she controlled.
The Federal Deposit Insurance Corp. issued a prohibition order against Pamela K. Swilley in July banning the former loan office at Gulfport, Miss.-based Hancock Bank from the banking business.
In October, Swilley was sentenced to 15 months in prison and ordered to pay $83,415 in restitution, according to Sunherald.com. She reportedly pleaded guilty to creating and cashing cashier’s checks using fraudulent names, including the names of some bank customers, between 2006 and June 2009.
In the same article, Sunherald.com said former Hancock Bank employees Margaret Migues and Willie Doris Burney pled guilty to embezzling $2,386,452 from depositor’s accounts between 1995 and 2009. The stolen amounts could be higher, but bank records don’t go beyond 2009.
Lee Bentley Farkas, who is accused of masterminding a fraudulent scheme to hide hundreds-of-millions of dollars in losses at the ill-fated Taylor, Bean and Whitaker Mortgage Corp., is asking for three additional months to prepare for his criminal case, the Business Courier reported. Farkas is asking that the trial start date in his case, which is pending in U.S. District Court for the Eastern District of Virginia, be moved to May 23 from Feb. 11.
Farkas had previously won a three-month delay in the case but lost a request to move the case to Florida, WSJ.com reported.
Pueblo, Colo., mortgage broker Anthony Paglione was arrested over allegedly mishandling payments for borrower David Roscover, the Pueblo Chieftain reported. Paglione allegedly bilked Roscover for $350,000.
After pleading guilty to embezzling $150,000 from customers of Puglisi Funding Inc., John Puglisi Jr. was sentenced to seven years in state prison, BuffaloNews.com reported. Allegedly under the influence of drugs, Puglisi diverted funds intended for mortgage investments.
Amy Budrys, Anthony Greer, Jennifer F. McKenzie and Deborah A. King have been charged with stealing 100 files from their employer, Northside Mortgage, and giving them to Dewitt Mortgage Co., 13WMAZ reported. The defendants allegedly eliminated the files from Milledgeville, Ga.-based Northside after they were taken.
Blanca Maciel Sanchez was arrested by police in Salinas, Calif., over allegations that she falsely represented herself as a real estate agent and mortgage broker under the business name of Maciel Financial Services and First Continental Mortgage, the Californian reported. The 37-year-old defendant allegedly collected thousands of dollars to help borrowers modify their loans.
United States of America, Plaintiff, v. Frederick Darren Berg, Defendant.
Case No. CR10-310, Oct. 13, 2010 (U.S. District Court for the Western District of Washington).
United States of America v. Lee Bentley Farkas, Defendant.
Criminal No. 1:10cr 200 (U.S. District Court for the Eastern District of Virginia).