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.