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Wednesday, March 31, 2010

Bank worker in Edinburgh raided customers' accounts to pay off £90,000 debt

A CUSTOMER service manager with Lloyds TSB raided the accounts of elderly customers and a neighbour when she was faced with debts of £90,000, a court heard. At Edinburgh Sheriff Court today Arlene Wales, 42, admitted embezzling £36,333.86 between 9 November 2004, and 30 May 2007, from branches in Dalkeith High Street and at the Cameron Toll Centre in Edinburgh.
Wales, of Brixwold Drive, Bonnyrigg, ADVERTISEMENTjoined the bank in 1992 and was appointed to her managerial post in Dalkeith in 2001.
Fiscal Depute, Pauline Shade, told Sheriff James Scott that the embezzlement came to light after a Mrs Drummond noticed £650 had been withdrawn from her father's account.
Wales had been transferred to Cameron Toll. The manager at Dalkeith could not explain what had happened and a full investigation began.
It revealed a number of irregularities and Wales was called in to a meeting on 31 May 2007.
The bank discovered that Wales had been taking money from accounts from November 2004 right up to the day before she was called to the meeting.
She resigned from the bank on 1 June 2007.
It was discovered that the £650 she had returned to Mrs Drummond had come from a fictitious account in the name of an elderly customer, David Hay, who had no knowledge of it. When the bank's investigators spoke to Mr Hay he told them that Wales had been "very helpful", sorting out his finances, settling bills and even bringing money to his home to save him having to go to the bank.
Wales took £12,589.86 from Mr Hay. Mr Hay has since died, but his estate has been re-imbursed by Lloyds.
Ms Shade explained that Wales had changed the addresses on Mr Hay's bank statements so that he did not discover the true nature of his finances.
The same scheme was used to take £4154 from the account of Mr David Johnstone, a friend and neighbour. When he queried the missing statements, she sent him a text message telling him not to worry, that there had been a mistake.
A married couple, George and June Brown, were also targeted by Wales.
The Fiscal said they were elderly, physically disabled with learning difficulties. She took £18,940 from their Disability Living Allowance account.
In July last year, Wales told the police she had been in considerable financial difficulties with debts of £90,000 from credit card debt, loans and overdraughts. Asked what had happened to the money, she said she had spent it to maintain the lifestyle she was enjoying and to paying off debts. She added that she was embarrassed about the state of her financnes and had not discussed it with her colleagues.
The Fiscal said that all Wales' victims had been repaid by the bank.
Sheriff Scott deferred sentence until 28 April for background reports and allowed Wales bail.

Monday, March 29, 2010

Jefferson, Louisiana Woman Pleads Guilty to Bank Larceny

JESSICA CARVER MATHERNE, a resident of Jefferson, Louisiana, pled guilty yesterday before U.S. District Judge Mary Ann Vial Lemmon to a one count bill of information for bank larceny, announced U.S. Attorney Jim Letten.

According to court documents, from approximately April 1, 2005, through approximately June 30, 2005, MATHERNE, who was employed as a bank teller at JP Morgan Chase Bank in Harvey, Louisiana, wrote checks against a closed credit union account and deposited those checks into an JP Morgan Chase Bank account in her name. The defendant admitted that she withdrew the funds from the JP Morgan Chase account before the checks from the closed credit union account were returned. In all, the defendant stole approximately $8,852 in funds belonging to JP Morgan Chase Bank.
MATHERNE faces a possible maximum term of imprisonment of ten (10) years, a $250,000 fine, restitution, and three (3) years of supervised release following any term of imprisonment. Sentencing has been scheduled for June 17, 2010.
The case was investigated by agents from the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Matt Chester.

Sunday, March 28, 2010

Search warrant served on March 15, 2010, but check-scammer flees in California

Investigators are looking for an Inland Empire woman who allegedly cheated dozens of people out of more than a million dollars in a mortgage scam. Dozens of fraud victims say it's been an absolute nightmare. They trusted a woman who authorities say then turned around and swindled them out of more than a million dollars. Police tried to arrest her but she was nowhere to be found.
It was an early morning wakeup call more than two years in the making. Just after sunrise, authorities served a search warrant at the Alta Loma home of Jodi Lee Nazir, to arrest her on multiple felony charges of embezzlement and grand theft. Police detained this woman, who told them Nazir wasn't home.
Authorities spent the morning collecting evidence. They say Nazir swindled millions of dollars out of a number of victims, including realtors Dan and Cheree Griffith.
"We've lost our home, lost our retirement, lost everything," said Dan.
For years, the Griffiths were part owners of an escrow company run by Nazir. But they say the company collapsed after a number of violations and schemes committed by Nazir; actions that left them, and many others, with no way to get their money back.
"There were over 200 employees and agents that had to find new jobs. There were buyers and sellers who lost money when the escrow company went away," said Cheree.
The District Attorney says one of the schemes involved an electronic check scanner that Nazir would use to deposit checks from the convenience of her office. But instead of destroying the checks afterwards, she would hold onto them.
Then, several months later, she would cash the same checks at a bank in Ontario. The DA's office says before the bank's computer could catch up with what did, she had moved the money, in essence, making hundreds of thousands of dollars.
"Apparently, this system was created by the banks for some of their better customers," said San Bernardino County Deputy District Attorney Vance Welch.
Welch said it was a system predicated on good faith, but it was one that was easily manipulated.
Nazir was arrested in 2007. Three years later, charges are finally on the way.
"Hopefully she'll be held accountable for what she's being charged for," said Welch.
If convicted, the District Attorney says Jodi Lee Nazir could get 12 to 14 years in prison, and bring justice for those who've waited for this day for years.
"This is vindication. One of the things Jodi always said was, 'If I had done something wrong, I'd be in an orange suit.' She will be soon," said Cheree.

Saturday, March 27, 2010

Feds want jail for Connecticutt woman who embezzled $700K from Credit Union

Federal prosecutors say they're seeking a five-year prison sentence for a Connecticut bookkeeper who embezzled more than $700,000 from a credit union in Meriden where she worked.

Melissa Laliberte, 39, of Wallingford pleaded guilty in September in Hartford federal court to embezzlement and filing a false income tax return. She is scheduled to be sentenced Tuesday.
Authorities say Laliberte took $743,768 from Meriden Franco-American Federal Credit Union, which was placed into liquidation last year.
Laliberte admitted she took cash from credit union members intended to pay down loan balances, made unauthorized withdrawals from their accounts, drew her salary several times a month and used member checks to pay her personal expenses.

Friday, March 26, 2010

River Valley Credit Union in Vermont ex-CEO sentenced for theft

Gary Ellis, the former CEO of River Valley Credit Union, was sentenced to six months in prison Wednesday after pleading guilty to embezzlement in U.S. District Court in Burlington. The 57-year-old Ellis, who now lives in Newmarket, N.H., will begin his sentence on April 28.
Chief U.S. District Judge William K. Sessions III also ordered that Ellis serve five years of supervised release after he finishes his prison term. Ellis must also serve an additional four months of home confinement and pay restitution of between $120,000 and $200,000. The exact restitution figure is scheduled to be determined at another hearing.
Ellis was the CEO of the Brattleboro-based credit union until he was fired in the spring of 2005 when he was accused of taking extra salary, bonus and other payments.
In December 2008, a federal grand jury in Rutland returned a one-count indictment charging Ellis with misappropriating money from the credit union between January 2001 and continuing through early 2005.
The Rutland office of the Federal Bureau of Investigation handled the case.

Thursday, March 25, 2010

Clients suing Hall, banks in North Carolina

Complaints say KS Bank let Mark Hall deposit checks that weren't his.

Two elderly people are suing former Smithfield investment adviser Mark Hall, seeking to recover the money they claim he stole from them.
In a complaint filed March 16, Verna Mae Hill, 90, of Garner says Hall took $168,176.18 from an annuity account. She names as co-defendants four firms that did business with Hall, including Smithfield-based KS Bank. Hill claims the bank allowed Hall to deposit into his account millions of dollars in checks payable to his clients.
Charles A. Depew, 76, of Wilson filed a similar complaint Friday.
Hall is already facing criminal charges -- 13 counts of embezzlement by an insurance agent and three counts of exploiting the trust of a disabled or elderly person. Prosecutors think Hall took a total of $2.6 million from 13 clients.
But Hill's civil complaint is the first allegation of wrongdoing by the companies involved.
"The common thread in all these 13 victims is that Hall was taking the check to KS Bank, and they weren't paying attention, which is frankly shocking," said Hill and Depew's lawyer, Andy Whiteman. "There wasn't even an effort to forge an endorsement."
Hill's complaint includes copies of deposit slips and notes that Hall was a shareholder in the bank. KS Bank chief executive Harold Keen declined to comment on the complaint, saying he hadn't had time to look at the documents.
Asked about the bank's policy on deposits, Keen said all banks require that checks be made out to the person cashing them.
In addition to KS Bank, Hill is seeking damages from Hartford Life Insurance Co., Cantella & Co. and J.P. Morgan Chase Bank.
The complaint says the accounts in question were Hartford annuities and that J.P. Morgan Chase is that company's bank. Hall's firm, Market Street Advisors, was an affiliate of Boston-based investment company Cantella.
The complaint says Hall visited Hill at her home during the spring of 2009. He asked her to sign annuity-withdrawal forms, which he told her were needed to "reduce the paperwork she would receive," the complaint says. Hill signed the forms but did not receive the entire document, she says.
The forms directed Hartford to withdraw all $168,176.18 from Hill's account and to send the money to her at Hall's office, according to the complaint.
Spokesmen for Cantella and Hartford said their companies couldn't comment on open litigation. Efforts to reach officials J.P. Morgan Chase were unsuccessful.
Whiteman, the attorney, said he will file additional complaints on behalf of three other clients in the coming weeks. Most will involve the same companies, and all will be filed in Wake County Superior Court, he said.
Hall remains in the Johnston County Jail under $100,000 bond. His court-appointed lawyer, Joy Jones, can legally represent him only on his criminal charges.
"He's not going to have money to retain anybody" in the civil case, Jones said.

Wednesday, March 24, 2010

Hillsboro, Wisconsin Woman Pleads Guilty to Bank Embezzlement

Stephen P. Sinnott, United States Attorney for the Western District of Wisconsin, announced that Sherry A. Eastman, 62, of Hillsboro, Wis., pleaded guilty yesterday in U.S. District Court in Madison to bank embezzlement. U.S. District Judge Barbara B. Crabb scheduled sentencing for May 25, 2010, at 1:00 p.m. Eastman faces a maximum penalty of 30 years in prison, and the entry of an appropriate restitution order.

At the plea hearing, Eastman acknowledged embezzling approximately $46,000 from the Farmers State Bank in Hillsboro while an employee of the bank. She admitted making unauthorized withdrawals from four customers accounts at the bank.
The charges against Eastman were the result of an investigation conducted by the La Crosse Resident Agency of the Federal Bureau of Investigation. The prosecution of the case has been handled by Assistant U.S. Attorney Grant C. Johnson.

Tuesday, March 23, 2010

Former Controller of Manhattan Investment Firm Pleads Guilty in Manhattan Federal Court to Embezzling Over $734,000

PREET BHARARA, the United States Attorney for the Southern District of New York, announced that RICHARD TEDESCHI, the former Controller of a Manhattan-based investment firm, pleaded guilty today to mail fraud and aggravated identity theft for stealing more than $734,000 from the firm. TEDESCHI entered his guilty plea before United States District Judge LEWIS A. KAPLAN in Manhattan federal court.

According to the criminal Information to which TEDESCHI pleaded guilty, documents previously filed in this case, and statements made in court: While employed at the investment firm, TEDESCHI engaged in a seven-year scheme to defraud the firm. Among other things, TEDESCHI forged the signatures of officers who had check-signing authority on company checks and used the company checks to make payments on his personal expenses or to himself directly. TEDESCHI also obtained authorized representatives' signatures on the firm's checks to make payments on what TEDESCHI represented to be company expenses, but which were actually for his personal expenses. Additionally, TEDESCHI caused unauthorized charges to be made on the investment firm's American Express account.
In all, TEDESCHI stole over $734,000 from the firm, over $633,000 of which was used to pay his personal American Express bills. TEDESCHI directed $7,500 to the payment of the mortgage on his home; $2,500 to the payment of telephone bills; and $12,000 to personal expenses charged on the firm's American Express account. He also caused the firm to pay him directly approximately $79,000.
TEDESCHI, 51, of Morris Plains, New Jersey, pleaded guilty to one count of mail fraud and one count of aggravated identity theft. TEDESCHI faces a maximum sentence of 20 years in prison on the mail fraud count, and a maximum fine of the greater of $250,000 or twice the gross pecuniary gain or loss from the offense. On the aggravated identity theft charge, TEDESCHI faces an additional two-year sentence that would be served consecutively with a sentence on the mail fraud charge. Sentencing is scheduled for June 21, 2010, at 11:00 a.m. before Judge KAPLAN.
U.S. Attorney BHARARA stated: "Richard Tedeschi abused his authority over his firm's finances, turning a position of oversight into something underhanded. After years of using forgery and fraud to siphon $730,000 for his own benefit, Tedeschi's gravy train is at an end. We will continue to partner with the Federal Bureau of Investigation to pursue thieves, whatever the color of their collars."
Mr. BHARARA praised the work of the Federal Bureau of Investigation in the investigation of this case.
This case is being prosecuted by the Office's Complex Frauds Unit. Assistant United States Attorney DAVID I. MILLER is in charge of the prosecution.

Monday, March 22, 2010

Garnerville, New York Woman Going To Prison For Embezzling Money From New City Bank

Today at 2 p.m., Milagros Rodriguez of Garnerville has been ordered to turn herself to federal authorities to begin her 33-month prison term for embezzling $700,000 from customer accounts at the Hudson City Savings Bank in New City. Rodriguez, 40, once a manager of the New City branch, plead guilty to making about 80 unauthorized transactions, periodically from April 2002 to March of 2009, according to the U.S. Attorney’s Office in White Plains. She pleaded guilty in December to one count of embezzlement.
U.S. District Court Judge Cathy Seidel sentenced Rodriguez on Feb. 19 to 33 months on federal prison, 60 months of supervised released. Seidel also ordered Rodriguez to pay restitution of $907,622.88 to the bank.
The criminal investigation began when two customers became concerned after learning their bank accounts had been closed and funds withdrawn in February 2009, leading the Hudson City Savings Bank to conduct an audit and bring in the FBI.
Based on the criminal investigation by the FBI and the Rockland District Attorney’s Office, Rodriguez was charged with one count of embezzling bank funds from the bank branch, located inside DeDeCicco Supermarket, 180 S. Main St., New City.

Sunday, March 21, 2010

Baton Rouge, Louisiana Banker Sentenced for Embezzling More Than $175,000

JEREMY J. RAYBURN, age 35, a resident of Baton Rouge, Louisiana, was sentenced in federal court today before United States District Court Judge Lance M. Africk to 18 months of imprisonment for one count of bank larceny, announced U.S. Attorney Jim Letten. In addition, Judge Africk ordered RAYBURN to be placed on three (3) years of supervised release following the term of imprisonment, during which time the defendant will be under federal supervision and risks an additional term of imprisonment should he violate any terms of his supervised release. RAYBURN has also been ordered to pay restitution in the amount of $178,224.80, which is the full amount of his embezzlement. According to court documents, RAYBURN was employed as a personal banker at JP Morgan Chase Bank in Metairie, Louisiana, from May 1, 2006 through July 26, 2007. RAYBURN realized that he had the ability to identify bank customers whose accounts were on dormant status, because they were either deceased or infrequently used. RAYBURN was then able to override this dormant status. RAYBURN then further devised a way to access and steal this money, in his position as a personal banker.
One particular customer, A.B., had been deceased for nearly 11 years, and RAYBURN decided to use this customer’s account, as a central repository for stolen funds from other customer accounts. According to the factual basis, RAYBURN caused some of the following fraudulent transactions: a transfer of $64,404.40 from the account of a deceased customer with the initials, M.S. to deceased customer A.B.’s account; a transfer of $55,002.53 from customer H.B.’s account to deceased customer A.B.’s account; a transfer of $26,357.68 from customer C.R.’s account to deceased customer A.B.’s account; and a transfer of $14,453.48 from customer D.H.’s account to deceased customer A.B.’s account.
RAYBURN was able to transfer these funds from account to account, by making counter withdrawals and forging the customer signatures in order to generate cashier’s checks. RAYBURN would then deposit these cashier’s checks into A.B.’s acccount. RAYBURN then requested that three (3) ATM cards be issued on A.B.’s account and then made ATM cash withdrawals from A.B.’s account at JP Morgan Chase and other banks in and around the New Orleans area. During a thirty (30) day period in 2007, RAYBURN withdrew nearly $25,000 in cash from different ATM’s located in the area.
RAYBURN sometimes used wire transfers to route money from A.B.’s account, to other accounts at other banks that RAYBURN controlled, including E-Trade. On June 6, 2008, RAYBURN transferred funds from various E-Trade accounts (funded by the customers’ stolen money) into one account, and then wired $100,000 to a JP Morgan Chase account. On June 19, 2008, RAYBURN withdrew $103,501.12 from this same JP Morgan Chase account, in the form of a cashier’s check. This cashier check was then used to pay a title company for a down payment on a home that RAYBURN purchased in Baton Rouge, Louisiana on the same day.
The case was investigated by the Special Agents of the Federal Bureau of Investigation. The prosecution is being handled by Assistant United States Attorney Jon Maestri.

Saturday, March 20, 2010

ATM theft alleged in Maryland

A St. Mary's judge ordered Wednesday that a man who worked servicing automated teller machines be held in lieu of $20,000 bond on charges that he stole that amount from a bank's machine in Mechanicsville. Michael Clark, 39, of Temple Hills protested that he now has been charged three times from the September 2007 incident at the Bank of America branch along Three Notch Road, including two circuit court indictments.
"How can I be charged twice with the same thing?" Clark asked the judge during this week's bond hearing. "It's the same indictment, except this time they added embezzlement."
St. Mary's detective Thomas Hedderich filed initial district court charging papers alleging that Clark, working in 2007 for NCR Corp., took $20,000 that the bank's employees had put in the machine to provide extra funds for customers during the Labor Day weekend.
The bank employees put the money in what they thought was a storage bin in the machine, so an NCR employee later could load it into the withdrawal section, court papers state, but the funds put in by the bank workers actually caused a malfunction in the machine.
NCR's records showed that the machine was accessed with Clark's key, court papers state, and the bank employees discovered that the money was missing when the bank reopened after the holiday. Clark was fired from NCR during its inquiry into the matter, according to charging papers.
St. Mary's Assistant State's Attorney Frank Cubero said this week in court that Clark has "numerous felony convictions" including two burglary offenses and two convictions for the possession of cocaine, and that Clark recently was in prison in Virginia for violating his probation in a burglary case.
The charges against Clark were refiled this year after new information was obtained, Assistant State's Attorney Daniel White said after the court hearing. "NCR provided the results of their internal investigation," White said, "and based on that, we developed additional evidence and recharged the case."

Thursday, March 18, 2010

Former Marshall County, West Virginia Credit Union Employee Accused of Embezzlement

A Moundsville woman accused of stealing money from the Marshall County Federal Credit Union has been indicted on seven counts of embezzlement. Shelley Guthrie allegedly took the money from December 2008 to August 2009, according to investigators.
No word on how much money was actually missing from the credit union

Wednesday, March 17, 2010

Hamburg, Pennsylavania woman sentenced for bank embezzlement

A former Hamburg bank teller has been sentenced to 27 months in prison for stealing $286,000 in a six-year period from a local Wachovia Bank. Tonya Marie Lord, 39, of the 700 block of State Street in Hamburg, was sentenced on March 9 by U.S. District Court Judge Joel H. Slomsky. Along with her prison sentence, Slomsky ordered Lord to pay restitution in the amount of $284,190.87, which she has reportedly already begun to pay back.
After completion of her prison term, Lord will serve five years on supervised release, during which time she may not engage in any employment that would give her access to money either directly, indirectly or through use of a computer. She may not acquire any new debt nor liquidate any assets during her probation without permission of federal probation officials.
The case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant U.S. Attorney Nancy E. Potts. Lord was represented by Reading attorney Allan S. Sodomsky.
The indictment of Lord on charges of embezzlement of funds by a bank employee was originally handed down by a grand jury on Sept. 3, 2009. She pleaded guilty to the indictment on Nov. 19.
According to the sentencing memorandum filed by Potts on Feb. 8, Lord abused her position at Wachovia Bank, 26 South 4th Street in Hamburg, to steal funds.
Potts said that on more than 100 different occasions, Lord “plotted, and then carried out and concealed, her thefts. Her crime was premeditated and took place over a six-year period.”
Potts went on to say that as custodian of the bank’s automated teller account, Lord was the only person trusted by the bank to oversee the operation and to make sure things were functioning correctly.
“Had someone been responsible for checking Ms. Lord’s handling of the AMT account at the Hamburg branch, her embezzlement would not have gone undetected for so long, and she would not have been able to steal as many times as she did,” Potts wrote.
The district attorney’s office alleged Lord used the money to live beyond her means, using the money to buy drugs, automobiles, motorcycles and other luxury items. Lord also used the money to pay on three overdrawn credit accounts.
In asking for a stiff sentence, Potts said bank thefts were an “all-too-often crime” that needed to be deterred. “Ms. Lord made many extremely irresponsible decisions to steal in a misguided effort to continue chasing a life her family could not afford,” the memorandum stated.
Potts said another theft in the tens of thousands of dollars occurred at the same bank in mid-2009, a case that currently remains unsolved.
“Although no one has yet been charged in that case, the sentence in this case will no doubt be the subject of discussion in the Hamburg and Wachovia communities.”
A Wachovia representative at the Hamburg branch refused comment and referred all questions to Wachovia corporate headquarters.
Lord, who has been free on bond, is to begin serving her sentence on April 26.

Tuesday, March 16, 2010

Woman Admits To Defrauding Cincinnati Credit Union

A Cincinnati woman pleaded guilty Thursday in federal court to defrauding her employer for nearly seven years. Ann Bryson admitted to one count of bank embezzlement, after investigators said she wrote checks and money orders from the Good Samaritan Employees Credit Union, where she worked from 1998 to 2005.
The 63-year-old Bryson used that stolen $245,432.66 to pay for personal expenses, investigators said.
Bryson admitted to using several methods to manipulate records in the credit union's ledgers to evade detection.
She faces up to 30 years in prison and $1 million in fines when she is sentenced July 1.

Monday, March 15, 2010

New York Bank Chief Charged With TARP Fraud

The former president of a small commercial bank in New York City closed by regulators on Friday was arrested Monday for allegedly defrauding the bank and its regulators, including attempting to defraud the U.S. government's Troubled Asset Relief Program out of more than $11 million. Charles J. Antonucci Sr., the former president and chief executive of Park Avenue Bank in New York City, has been charged with fraud on the Federal Deposit Insurance Corp., making false statements on a TARP application, mail fraud, bank fraud, wire fraud, embezzlement and other charges.
More interactive graphics and photos "Antonucci allegedly put his personal greed ahead of his professional duties, deliberately and repeatedly deceived regulators and even attempted to obtain through fraud more than $11 million in taxpayer rescue from the Troubled Asset Relief Program," said Preet Bharara, the U.S. attorney in Manhattan, at a news conference announcing the charges.
Mr. Antonucci, who was president and CEO of the bank from June 2004 until his resignation in October 2009, is the first person to be charged criminally with attempting to defraud TARP, the bank bailout program passed as the nation teetered on the verge of an economic meltdown in 2008, prosecutors said.
The investigation into Antonucci's alleged conduct is ongoing, Mr. Bharara said.
In light of the allegations, Mr. Bharara said his office and banking regulators will take a harder look at troubled and failing banks in New York state in order to root out any similar malfeasance.
"Whenever and wherever we find there's misconduct, we will use every technique and every tool to prosecute those responsible to the fullest extent of the law," Bharara said.
An unshaven and bespectacled Mr. Antonucci was taken into custody by federal agents at 7 a.m. EDT at his home in Fishkill, N.Y.
Wearing a red St. John's University hooded sweatshirt, blue track pants and brown loafers, Mr. Antonucci sat quietly next to his lawyer and said little at a bail hearing Monday.
Bail was set at $2 million, to be secured by his home in Fishkill and his wife's apartment in Queens, N.Y.
"These charges are what they are," said Charles Stillman, a lawyer for Mr. Antonucci. "We're going to study them and consider what our appropriate response to the charges will be."
Mr. Bharara said Mr. Antonucci's illicit activity contributed to the ultimate failure of the bank, which was closed by New York state banking regulators on Friday. The bank's branches have been sold and reopened as branches of Valley National Bancorp.
When it was seized, the bank had total assets of $520.1 million and total deposits of $494.5 million as of the end of 2009, the FDIC said.
Mr. Bharara said banking regulators downgraded the bank in 2008, ultimately finding it was undercapitalized in September 2008.
Mr. Antonucci then undertook a scheme to make it appear the bank was properly capitalized by purportedly making a personal investment in the bank, prosecutors alleged in a criminal complaint. Instead, Mr. Antonucci allegedly engaged in a sham "round-trip" using the bank's own money to make it appear he had made a personal investment, according to the complaint.
"The bank was broken, so, in October and November 2008, Antonucci methodically went about pretending to fix it," Mr. Bharara said.
The money was structured as loans to the bank by a group of companies controlled by an unnamed bank customer; the money was ultimately funneled back to Mr. Antonucci via a consulting firm he owned, according to the criminal complaint. The account signer for both company's accounts was the customer's administrative assistant, according to the complaint.
Mr. Bharara described the purported investment by Antonucci as "functionally [the] equivalent of Monopoly money."
As a result of the purported investment, Mr. Antonucci received more than 308,000 shares in the bank, giving him about 52% of the bank's outstanding shares, according to the criminal complaint.
Richard H. Neiman, New York's superintendent of banks, said the alleged fraudulent conduct was first uncovered by New York bank examiners.
James T. Hayes, special agent in charge of the New York office of the Department of Homeland Security's U.S. Immigration and Customs Enforcement, said the investigation lasted about five months.
He said Mr. Antonucci first appeared on ICE's radar after it was contacted by the agency's local office in Ecuador about an individual interested in engaging in an illegal business deal with Antonucci. He declined further comment about the alleged illegal business dealing.
Mr. Antonucci also allegedly made false statements and committed mail fraud in connection with an application by the bank for more than $11 million in TARP funds in 2008, using his purported $6.5 million investment as part of the basis for the application, prosecutors alleged in the complaint.
The FDIC advised Mr. Antonucci in February 2009, as the bank's financial condition continued to deteriorate, that it wouldn't recommend the TARP application for approval and the bank withdrew its application, according to the criminal complaint.
In the complaint, prosecutors alleged Mr. Antonucci received free flights on more than 10 occasions in 2008 and in 2009 on the bank customer's private plane, including flights to the Super Bowl in Arizona, to Panama and the Masters golf tournament in Augusta, Ga.
Mr. Antonucci allegedly approved about $8.5 million in overdrafts to the companies controlled by that customer, according to the complaint.
In addition, Mr. Antonucci allegedly arranged for the bank to lease space from three properties he owned in Fishkill, N.Y., causing the bank to spend more than $1 million to improve, lease and pay expenses on the properties, prosecutors alleged in the complaint. The bank used only one of the properties, according to the complaint.
Mr. Antonucci also allegedly stole more than $103,000 from pastors of a church in Coral Springs, Fla., by offering to pay four times their investment through a purported bond, according to the complaint. The money was deposited in an account he controlled at the bank and never repaid; it was, instead, divided between Antonucci and another unnamed co-conspirator, according to the complaint.
Park Avenue Bank of New York isn't affiliated with Park Avenue Bank in Georgia.

Sunday, March 14, 2010

Silvis, Illinois woman gets 4 years for embezzlement

A former employee of Southeast National Bank, Moline, was sentenced to four years in federal prison Friday for embezzling nearly $500,000. Sandra L. Savala, 42, of Silvis, Ill., pleaded guilty to the crime in U.S. District Court, Rock Island, in August. She faced up to 30 years in prison.
According to prosecutors, Savala embezzled $481,000 from Southeast National Bank, 3535 Avenue of the Cities, between July 1996 and about February 2004. She was hired in 1991 and was promoted from a teller to loan processor, teller manager and banking center manager.
She first embezzled cash from the ATM machine and later the bank vault. She used the bank's general ledger accounts to hide the shortage created by the missing cash. The bank's general ledger transaction records showed an increasing cash shortage, from $11,500 beginning in July 1996 to $480,000 in February 2004, prosecutors said.
Savala must pay $481,000 in restitution and will serve five years of supervised release

Saturday, March 13, 2010

Easley, South Carolina woman indicted for bank embezzlement

An Easley woman is charged with embezzling thousands of dollars from her employer, an Easley bank. Acting United States Attorney Kevin F. McDonald said Mary E. Reddy, 45, of Easley, was charged in federal court with bank embezzlement.
Federal authorities allege that while working at Sun Trust Bank in Easley last July, Reddy withdrew $11,000 from a customer's account without authorization.
The maximum penalty Reddy could receive is a fine of $1,000,000 and imprisonment for 30 years.

Friday, March 12, 2010

Woodruff, South Carolina woman accused of embezzlement from Union bank

A 44-year-old Woodruff woman was indicted Wednesday on accusations that she embezzled more than a half-million dollars from a Union bank. Kimberly O. McAbee, of 1700 SJ Workman Highway, faces a one-count federal indictment. Investigators say she embezzled about $520,000 between 2005 and 2009 from Arthur State Bank in Union.
The maximum penalty for that crime is a $1 million fine and 30 years in prison.
Acting U.S. Attorney Kevin McDonald said he could not discuss details of the case at this time.
McDonald did say, however, "She was a loan administrator, and she used her authority in that position to access bank funds."
Bank officials discovered money missing and contacted federal authorities, McDonald said. He could not say when.
McAbee is the niece of former Woodruff City Clerk Beverly Mitchem Maddox. Maddox was fired in August after 37 years with the city. She was charged by the State Law Enforcement Division in November with embezzling $45,448 of public funds between 2006 and 2008.
The warrant against Maddox stated she used her access to public funds to direct the money to her personally controlled bank account at Arthur State Bank. Maddox wrote in a voluntary statement to SLED that the money "did not go for vacations or such but did help go to pay credit cards and help family members."
The McAbee family would not comment

Thursday, March 11, 2010

Manhattan U.S. Attorney Charges President and Chief Operating Officer of Mount Vernon Money Center with Defrauding Banks, Retailers, Hospitals, and Universities out of $50 Million

PREET BHARARA, the United States Attorney for the Southern District of New York, JOSEPH M. DEMAREST, JR., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation ("FBI"), and NEIL BAROFSKY, the Special Inspector General of the Office of the Special Inspector General for the Troubled Asset Relief Program ("SIGTARP"), announced the indictment of ROBERT EGAN, the President of Mount Vernon Money Center ("MVMC"), and BERNARD McGARRY, MVMC's Chief Operating Officer, on charges of defrauding banks, other financial institutions, retailers, hospitals, and universities out of $50 million in funds that had been entrusted to MVMC. EGAN was arrested on February 8, 2010, on a Complaint previously-filed in this case. McGARRY is expected to surrender to federal authorities tomorrow.
According to the Indictment unsealed today in Manhattan federal court and other documents filed in the case:
MVMC engaged in various cash management businesses including replenishing cash in over 5,300 Automated Teller Machines ("ATMs") owned by banks and other financial institutions. In addition, through a subsidiary called Armored Money Services ("AMS"), MVMC provided armored car services to banks, other financial institutions and retailers. MVMC also provided payroll services to various employers, including hospitals and universities, which permitted employees to cash their paychecks on their employers' premises. In connection with these businesses, MVMC owned and operated several cash vaults, in which MVMC and its affiliated businesses stored and processed cash collected from and distributed to its clients, and other cash depositories such as the Federal Reserve Bank.
From 2005 through February 2010, EGAN and McGARRY solicited and collected hundreds of millions of dollars from MVMC's clients on the false representations that they would not commingle clients' funds or use the funds for purposes other than those specified in the various contracts between MVMC and its clients. In truth and in fact, however, EGAN and McGARRY misappropriated MVMC's clients money to fund tens of millions of dollars in operating losses in MVMC's businesses, to repay outstanding client obligations, and to enrich themselves at their clients' expense.
The defendants engaged in a practice known as "playing the float." More specifically, MVMC was entrusted on a weekly basis to hold tens of millions of dollars for its clients for specific business purposes for a specified period of time. Relying upon the continual influx of funds, EGAN and McGARRY misappropriated the clients' funds for their own use, either to cover operating expenses of one or more of the MVMC operating entities, to repay prior client obligations, or for their own personal enrichment.
Furthermore, in connection with MVMC's ATM replenishment business, and in violation of MVMC's contractual obligations, MVMC commingled different banks' and other clients' money in its vaults and bank accounts. Instead of segregating cash for each of its clients, however, MVMC personnel, acting at the direction of EGAN and McGARRY, took whatever cash that arrived in the vault, regardless of its source, to fill the next day's ATMs. Additionally, McGARRY, who controlled MVMC's bank accounts, transferred funds between and among MVMC's businesses in order to cover operating losses or to repay client obligations.
EGAN and McGARRY falsely represented to clients that they would not commingle or misuse their funds. These fraudulent representations to clients were included in part in daily and weekly reports sent by e-mail to ATM clients, purporting to represent the amount of cash MVMC held in its vaults on behalf of each client. These reports, called "Vault Inventory" reports, falsely represented to each client that its funds were segregated in MVMC's vaults. In addition, the cumulative total cash balances represented on the vault inventory reports for all of MVMC's ATM clients falsely inflated the actual cash held in MVMC's vaults by tens of millions of dollars.
As a result of the fraudulent commingling and misappropriation of customer funds described above, in February 2010, MVMC had been entrusted with approximately $70 to $75 million by its clients, but, in truth and in fact, only held approximately $20 to $25 million in cash in its vaults and bank accounts. Following EGAN's arrest, the United States Attorney's Office for the Southern District of New York obtained an Order from United States District Judge RICHARD M. BERMAN, placing MVMC in receivership. As a result, a court-appointed receiver now administers the day-to-day business of MVMC, including administering claims by victims of the fraud.
If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney's Office for the Southern District of New York, at (866) 874-8900 or For additional information, go to: on the Internet.
EGAN and McGARRY are charged with one count of conspiracy to commit bank fraud and wire fraud and six counts of bank fraud. If convicted, they face a maximum penalty of 30 years in prison and a maximum fine of one million dollars or twice the gain or loss resulting from the crime for each of the counts. This case is assigned to United States District Judge JOHN F. KEENAN.
EGAN, 64, resides in Bedford Corners, New York, and McGARRY, 50, resides in Yonkers, New York.
U.S. Attorney PREET BHARARA stated: "When we first brought charges relating to MVMC in February, the scope of the criminal conduct alleged was significant. After further investigation and according to today's Indictment, however, it turns out that the alleged fraud was more than four times what was originally thought and victimized not just one bank, but also hospitals, retailers, universities, and additional banks that entrusted hundreds of millions of dollars to Robert Egan and Bernard McGarry. These two professionals allegedly breached that trust by unscrupulously misusing more than $50 million of their clients' hard-earned money. Along with our partners at the FBI and SIGTARP, this Office remains committed to rooting out corporate corruption across the financial services industry."
FBI Assistant Director-in-Charge JOSEPH DEMAREST, JR., stated: "MVMC was entrusted with millions of dollars of clients' funds, and Egan and McGarry had a responsibility to safeguard those funds. But beyond that, they affirmatively represented to those clients that they were maintaining the integrity of the funds. The allegation is that Egan and McGarry repeatedly lied about how the funds were maintained, and how much of their clients' money was really on hand. In essence, they stole their clients' money and lied to conceal the theft."
SIGTARP Special Inspector General NEIL BAROFSKY stated: "Through the TARP program, the American people are shareholders in hundreds of financial institutions, including some of the banks that are the victims of the egregious fraud alleged in the Indictment announced today. SIGTARP will work tirelessly with its law enforcement partners to take action against any illegal conduct that serves to damage the taxpayers' investments."
Mr. BHARARA praised the investigative work of the FBI and SIGTARP and added that the investigation is continuing.
This case was brought in coordination with President BARACK OBAMA's Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
This matter is being handled by the Office's Complex Frauds Unit. Assistant United States Attorneys ANTONIA M. APPS and ANNA E. ARREOLA are in charge of the prosecution.
The charges and allegations contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Monday, March 8, 2010

Des Peres, Missouri title company owner admits theft

The owner of a Des Peres title company pleaded guilty in U.S. District Court in St. Louis Friday to a single felony count of wire fraud and admitted using $250,000 in an escrow account for his own business and personal use.
Stephen G. Davis, 45, owned Title Professionals LLC, known as Title Pros, as well as Southwest Title LLC and Professional Disbursing. Professional Disbursing was a company that temporarily held, then distributed money to contractors working on the construction of residential properties in the area.
The $250,000 came from the account of someone building a $17 million house in St. Charles. When the homeowner requested the money back, Davis took $250,000 from other money in Title Pros escrow account, which contributed to the collapse of the company and forced the underwriter to repay the money.
Under federal sentencing guidelines, Davis faces 21 to 27 months in prison when sentenced May 28. He could get a break for cooperating with investigators, however.
Davis’ lawyer, Burt Shostak, declined to comment after Friday’s hearing.

Sunday, March 7, 2010

Arrest in Lincoln, Nebraska Bank Account Embezzlement

Lincoln police say a 28-year-old man has been arrested, accused of stealing more than $13,600 from bank customer accounts. Capt. David Beggs says 28-year-old Jason Hill transferred the money into his account while working at a U.S. Bank branch in Lincoln between June last year and this past January.
Beggs says Hill has already returned the money. A jail spokeswoman says Hill has left county custody.
There is no public phone listing for Hill. Court records don't list his attorney's name.

Saturday, March 6, 2010

Former Casper, Wyoming teller admits to embezzlement scheme

A former Wells Fargo bank teller admitted Friday to a scheme in which she and another worker embezzled more than $70,000 from the downtown Casper branch. Erin Adamson told a judge she and the other teller would move cash between their drawers and the bank vault to hide the theft during audits.
"The audits were not a surprise," she said. "Everybody knew they were coming."
Appearing in U.S. District Court in Casper, Adamson admitted to the scheme as part of a plea deal with prosecutors. She pleaded guilty to bank embezzlement and conspiracy.
Under the deal, prosecutors agreed to dismiss a second embezzlement charge.
According to federal guidelines, Adamson could be sentenced to anywhere from 10 to 16 months of confinement. Prosecutors have agreed to make a recommendation for home or intermittent confinement, but a judge will make the final determination.
If her case had proceeded to trial, the 28-year-old could have faced the possibility of up to 90 years behind bars.
Adamson said she was working as head teller when she began embezzling money from Wells Fargo in October 2008. The other teller, Amanda Johnson, became involved in the embezzlement a month or two later, Adamson explained.
"We never really talked about it," she told Magistrate Judge Michael Shickich. "It just happened that way."
Adamson, who remains free pending her sentencing, estimated the conspiracy netted roughly $60,000. She stole another $10,000 out of the cash vault by hiding it in her boot. She used the cash to cover other money that she had stolen.
The vault required two codes to get inside. Each woman originally knew one of the codes.
Adamson told Shickich she didn't know how often the women would embezzle money. She did say she learned both codes and went into the vault five times without Johnson's help.
Johnson is also charged with conspiracy to commit embezzlement. Federal prosecutors and Johnson's attorney, Stefanie Boster, have also discussed a potential plea deal, but did not resolve the matter, according to court papers filed Feb. 26 by Assistant U.S. Attorney Darrell Fun.
In the statement, Fun indicated he believed Johnson's case would proceed to trial on March 22.
A federal grand jury indicted the women in January. Both defendants initially pleaded not guilty.

Ex-bank employee in Ocean Springs, Mississippi charged with embezzlement

A former bank employee on the Mississippi coast has been charged with stealing from customers' accounts over a period of nearly 30 years. Court records didn't say how much money 52-year-old Margaret Migues allegedly stole between 1980 and 2009 while working at Hancock Bank in Ocean Springs.
Her attorney, Tim C. Holleman, did not immediately respond to a message.
Migues is charged with embezzlement in U.S. District in a one-count criminal bill of information, which is often filed by prosecutors when a defendant agrees to waive grand jury indictment and plead guilty.
Messages for a bank spokesman weren't immediately returned.

Friday, March 5, 2010

Former Bank Official in New Orleans Sentenced for Bank Theft and Larceny

HONG NGUYEN, age 41, a resident of New Orleans, Louisiana, was sentenced today in federal court by U.S. District Court Judge Ivan L.R. Lemelle to twenty-one (21) months' imprisonment for bank theft and larceny, announced U.S. Attorney Jim Letten today. In addition, Judge Lemelle imposed three (3) years of supervised release during which time the defendant will be under federal supervision and risks an additional term of confinement should she violate any terms of his supervised release. In addition, NGUYEN was ordered to pay restitution in the amount $1,090,000.00 to Capital One Bank.

According to reports, NGUYEN was an assistant manager in charge of branch operations and customer relations at Capital One Bank in the New Orleans, Louisiana area. During the course of her employment and over a period of several years, as an assistant manager in charge of bank operations and customer service, NGUYEN had access to the accounts and computers of the bank. NGUYEN would cash out debit tickets and cashier’s checks drawn from the lines of credit of customer’s accounts and then concealed these thefts by debiting other line of credit accounts. NGUYEN embezzled approximately $1,090,000.00.
The case was investigated by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Juan M. Masini.

Wednesday, March 3, 2010

Annapolis, Maryland Mortgage Broker Pleads Guilty in $2.3 Million Fraud Scheme

David Wehrs, Sr., age 54, of Annapolis, Maryland, pleaded guilty today to wire fraud in connection with a scheme to defraud investors and financial institutions of more than $2.3 million.

The charge was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.
According to his plea agreement, Wehrs owned Maryland Title and Escrow Company, Inc., located in Annapolis, and operated a small home remodeling company called Show-Me. From 2007 to October 2009, Wehrs induced individuals to invest money through Maryland Title into a purported FDIC-insured money market fund that Wehrs “guaranteed” would pay monthly interest payments of 10.85%. Instead of depositing the money into an “American Funds Fixed Rate Money Market” as promised, Wehrs deposited investor funds into one of two bank accounts he controlled in the name of his title company. Wehrs wire transferred a large portion of these investor funds to a brokerage account in the name of his title company, then used the money to “day trade.” Day trading is the rapid buying and selling of securities throughout the day in the hope that the stocks will continue climbing or falling in value for the seconds to minutes that they are owned, allowing a person to lock in quick profits. During the scheme, Wehrs conducted millions of dollars of stock trades per month. From early 2008 until mid-2009, Wehrs lost approximately $1 million.
In addition to day trading, Wehrs used some of the investor funds to: pay “monthly interest” and “redemptions” to other investors; pay expenses of his other businesses, including Show-Me; make escrow payments for his title company; buy real estate and personal property; and pay other personal expenses.
Wehrs admitted that in June 2009, when he had no money left in his personal bank accounts or day trading accounts to pay interest due to investors, he used $630,611 earmarked to pay lending institutions for mortgage payoffs from his escrow account at Maryland Title to pay investors, causing that amount of loss to the title insurance company for Maryland Title. He also used $100,000 from the Maryland Title escrow account that was earmarked as earnest money for the purchase of an individual’s home to pay interest to investors, causing a loss of $100,000 to the home buyer.
The total loss as a result of Wehrs’ scheme is $2,371,061 to investors and the title insurance company. U.S. District Judge Benson Everett Legg has scheduled sentencing for May 19, 2010 at 3:00 p.m.
Wehrs faces a maximum sentence of 20 years in prison. As part of his plea agreement, Wehrs is required to pay restitution of $2,371,061 and to forfeit any assets derived from the scheme. Any forfeited assets will be applied to the restitution amount.
Mr. Rosenstein and Mr. McFeely gave special thanks to the Securities and Exchange Commission and the Maryland Insurance Administration for their work in the investigation and prosecution of this case.
United States Attorney Rod J. Rosenstein commended Assistant United States Attorney Tonya Kelly Kowitz, who is prosecuting the case.

Tuesday, March 2, 2010

Former Bank Vice President in Maryland Sentenced for Fraudulently Transferring Money from Clients’ Accounts

U.S. District Judge J. Frederick Motz sentenced Andrew Rosenfeld, age 39, of Ellicott City, Maryland, today to one year and a day followed by five years of supervised release for conspiracy to commit bank fraud. Judge Motz also ordered that Rosenfeld pay restitution of $226,000.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Chief James W. Johnson of the Baltimore County Police Department.
According to Rosenfeld’s plea agreement, from June 2008 to January 2009, Rosenfeld was a vice president client service manager at Wells Fargo Bank. The bank acted as a trustee for collateralized debt obligation (CDO) clients and was responsible for using money generated by the CDOs to pay invoices for its CDO clients. Rosenfeld supervised one of three teams of bank employees who executed wire transfers on behalf of CDO clients. To pay a client’s invoice, a member of Rosenfeld’s team would fill out a wire instruction, and submit the invoice and wire instruction to Rosenfeld or another supervisor for approval. Once approved, the wire transfer was executed to pay the invoice.
Beginning in June 2008, Rosenfeld and another bank employee involved in the scheme created false invoices to funnel money to themselves. Sometimes Rosenfeld submitted a false invoice to an unwitting member of his team causing a fraudulent wire transfer to be processed, which Rosenfeld would approve. The other employee also personally processed fraudulent wire transfers and submitted them to another unwitting supervisor to approve. Rosenfeld and the other employee involved in the scheme transferred the fraudulently obtained money into bank accounts controlled by the other employee or the other employee’s friends, and they all shared the money among themselves. Rosenfeld also recruited a third bank employee to fraudulently execute a wire transfer and Rosenfeld split his portion of the proceeds with him as well.
Rosenfeld was laid off in January 2009. At that time, 21 fraudulent wire transfers had been executed, resulting in a total loss of $226,000.
United States Attorney Rod J. Rosenstein commended Assistant United States Attorney Tonya Kelly Kowitz who prosecuted the case.

Monday, March 1, 2010

Former Springfield, Missouri Bank Officials, SBA Bank Manager Among 16 Defendants Indicted in $10 Million Bank Fraud Scheme

Beth Phillips, United States Attorney for the Western District of Missouri, announced today that two former bank vice presidents and the former branch manager of the Small Business Administration’s office in Springfield are among 16 defendants who have been indicted in five separate but related cases for their involvement in a bank fraud scheme that took advantage of business loans guaranteed by the Small Business Administration.

According to the indictments, the bank fraud scheme involved at least 31 fraudulent business loans, ranging from $100,000 to $1.6 million, issued by Mid-America Bank and Trust Company (MABTC) in Pulaski County, Mo., between January 2005 and January 2007. The fraudulent loans cited in the indictments total more than $10.1 million.
George G. Spencer, 53, and Dennis K. DePriest, 55, both of Ozark, Mo., Larry Steven Aduddle, 63, of Springfield, Mo., Richard N. DeLong, 44, of Newburg, Mo., Melinda L. Reese, 37, of Dixon, Mo., Gerald E. Harris, 68, of Edgar Springs, Mo., Michael Edward Clegg, 48, of St. Robert, Mo., his daughter, Andrea M. Clegg, 25, of Laquey, Mo., Perris D. Rask, 67, of Licking, Mo., Keith David Miller, 54, of Republic, Mo., and Lindell L. Vawter, 65, of Rock Island, Ill., were charged in a 185-count indictment returned under seal by a federal grand jury on Feb. 5, 2010. That indictment was unsealed and made public today upon the arrest and initial court appearance of DePriest.
DeLong was executive vice-president and chief lending officer at MABTC during the course of the alleged conspiracy. Reese was vice-president and loan compliance officer at MABTC from 1998 through May 2008. Aduddle was the branch manager of the Small Business Administration’s Springfield office from March 21, 2005, to May 21, 2007.
Several of the defendants were business owners. Rask owned Circle R Saloon, Inc., which ran the Rockin R Saloon and Adonia’s Steak and Seafood in St. Robert. Vawter owned and operated Vawter, Inc., doing business as A&W Root Beer/Long John Silver’s restaurant in St. Robert. Michael Clegg was president of Heintz Lighting One and Appliance, Inc. Miller owned and operated RadiusCom Corporation, which provided wireless Internet service in Republic, Missouri. Harris owned Harris Land Development, LLC and Gerald Harris Construction, Inc.
In separate but related cases, Daniel J. Metz, 65, of Eldon, Mo., Randall S. Rogers, 41, of Springfield, Mo., and Catherine S. Debar, 42, of Rolla, Mo., were charged in three separate indictments that were returned by a federal grand jury in Springfield on Dec. 17, 2009. In each case, the indictments allege, the defendants were nominee borrowers—that is, borrowers in name only, for loans that were secretly for the benefit of others. They allegedly claimed the loans would be used for legitimate business purposes, when in reality the loans were made to benefit others and for other purposes.
In another related case, James Stewart Dunlop, Jr., also known as “Stu,” 55, of Springfield, Mo., was charged in an indictment returned by a federal grand jury in Springfield on Dec. 17, 2009. In this case, the indictment alleges that Dunlop concealed his ineligibility for a Small Business Administration loan and that he conducted financial transactions to conceal the proceeds of the related bank fraud scheme.
The indictment that was unsealed today alleges that, beginning in January 2005, Spencer, DePriest, Aduddle and DeLong participated in a conspiracy to obtain loans from MABTC and to defraud the Small Business Administration. Those loans, according to the indictment, were guaranteed by the Small Business Administration under federal loan programs that were designed to provide financial assistance to small businesses. They and the other eight co-defendants in this indictment are also charged with participating in a bank fraud scheme to fraudulently obtain loans from MABTC.
According to the indictment, Spencer and DePriest assisted DeLong as consultants to Michael Clegg, Vawter and Rask, each of whom controlled failing businesses and had outstanding MABTC loans with significant past due balances. DeLong allegedly made loans and issued lines of credit to nominee borrowers, including entities controlled by Spencer, Harris and Boothe, in order to conceal unbooked letters of credit that he had issued in the name of MABTC. DeLong allegedly made additional loans to nominee borrowers including Rogers, Metz and Debar in order to conceal improvident loans, previously made nominee loans and nominee lines of credit, and to cure overdrafts.
As part of the conspiracy, the indictment alleges that DeLong made false entries in the records of MABTC to conceal disbursements of bank funds and past due loan payments of distressed borrowers. DeLong allegedly structured loans to avoid scrutiny of those loans by the MABTC board of directors.
According to the indictment, Spencer, DePriest, and others organized limited liability companies solely as nominee borrowers, the indictment says, and recruited nominee borrowers to funnel MABTC loan proceeds that were guaranteed by the Small Business Administration to themselves and others.
DeLong allegedly requested Small Business Administration guarantees of MABTC loans made to nominee borrowers recruited by Spencer and DePriest. DeLong allegedly signed fraudulent Small Business Administration loan authoriziations for MABTC loans whose proceeds ultimately benefitted Spencer, DePriest and others.
As part of the conspiracy, the indictment alleges that Spencer, DePriest and Dunlop prepared fraudulent Small Business Administration borrower applications for submission to the Small Business Administration. DeLong and others misapplied MABTC loan proceeds, some of which were guaranteed through Small Business Administration loan programs, by diverting those proceeds to Spencer, DePriest, and others.
The indictment also alleges that Spencer paid a $7,500 bribe to DeLong in order to receive a $195,000 business loan from MABTC.
The indictment charges various defendants in a total of 185 counts of making false bank entries, making false statements to MABTC, making false statements to the Small Business Administration, bank bribery, bank fraud, misapplication of loan funds, false bank entries and money laundering.
In separate indictments, Metz and Debar are each charged with two counts of making a false statement to MABTC in connection with a loan. Rogers and Dunlop are each charged with one count of making a false statement to MABTC in connection with a loan. Rogers is also charged with one count of money laundering. Dunlop is also charged with two counts of money laundering.
Phillips cautioned that the charges contained in these indictments are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
These cases are being prosecuted by Supervisory Assistant U.S. Attorney Michael S. Oliver. They were investigated by the Small Business Administration – Office of Inspector General and the FBI.