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Tuesday, July 23, 2013

Former owner of failed Premier Bank arrested, charged with fraud in Illinois

The former chairman of a failed Wilmette bank and his wife, along with two former board members, have been arrested and charged with defrauding the federal government and misappropriation of funds.
Dr. Zulfikar Esmail, 70, owner and former chairman of Premier Bank, was arrested by state police July 10 at his home in Evanston and charged with being the organizer of a continuing financial crimes enterprise in conjunction with his activities at the bank, according to a spokeswoman for Illinois Attorney General Lisa Madigan. If convicted on the felony charges, he would face mandatory jail time of six to 30 years.
Also arrested and charged were his wife, Shamim Esmail, 65, who sat on the Premier Bank board, and former directors Robert McCarty, 51, of Geneva, and William Brannin, 53, of Chicago, the spokeswoman said. They face lesser felony charges, which don't carry mandatory prison time but are punishable by four to 15 years in prison, she said.
Dr. and Ms. Esmail were released on a collective $850,000 bond. Messrs. McCarty and Brannin were released on bonds of $400,000 and $350,000, respectively.
The four were charged for their alleged roles in what Ms. Madigan's office described as a “long-running fraud scheme to defraud Premier Bank, the U.S. Treasury Department and the Federal Deposit Insurance Corp.”
Added Ms. Madigan's spokeswoman, “As part of the scheme, the defendants had access to and helped to misappropriate millions of dollars in bank funds.”
The spokeswoman said more details of the case would be announced on Aug. 6, when the defendants are scheduled to be arraigned in Cook County Circuit Court.
A Chicago lawyer representing the Esmails and Mr. Brannin declined to comment. A lawyer representing Mr. McCarty also declined to comment, saying he didn't have enough information about the nature of the allegations to respond.
Dr. Esmail, a physician, launched Premier Bank in 2000, and the lender grew to a peak of $350 million in assets in 2009. The bank had $269 million in assets when it failed in March 2012. The failure wiped out $6.8 million in bank bailout funds it had received from the Treasury Department as part of the Troubled Asset Relief Program.
Premier Bank not only obtained TARP funds in 2009, but the federal government refinanced the bank into a cheaper bailout program in 2010 that it had made available to designated community development financial institutions — lenders serving low-income or underserved communities.
The March 2012 failure of Premier Bank is projected to cost the FDIC's insurance fund an estimated $64.2 million, according to the agency's most recent estimates.
The bank was a defendant in a 2012 lawsuit filed in Cook County Circuit Court by George Dernis, owner of the Michael's Fresh Market chain of grocery stores. Mr. Dernis and his company had borrowed a total of $22 million from Premier Bank, a remarkable 14 percent of the bank's total loans as of Dec. 31, 2011.
In his complaint Mr. Dernis accused Dr. Esmail, among other things, of pressuring him to give Dr. Esmail and his children equity stakes in some of his stores as a condition of obtaining credit.
Five of the eight stores formerly owned by Mr. Dernis are operating under new ownership after emerging from Chapter 11 bankruptcy. In addition, Mr. Dernis filed for personal bankruptcy. His lawsuit against the bank and the Esmails still is pending, but the FDIC as receiver is now the defendant in the bank's place.
“I lost everything,” Mr. Dernis said Friday. “I'd really like to apologize to my wife and my family and my creditors for everything they went through.

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