A southwestern Illinois woman faces up to three decades in federal prison

A southwestern Illinois woman faces up to three decades in federal prison now that she's admitted embezzling more than $100,000 from a bank where she worked.

Forty-five-year-old Cynthia Palmer of Alton pleaded guilty Wednesday in East St. Louis to bank fraud and is to be sentenced Dec. 15.

Authorities say Palmer was working at a U.S. Bank branch in Bethalto when she stole nearly $106,000 from the accounts of customers ranging in age from 65 to 96.

The (Alton) Telegraph reports that Palmer's attorney, John Stobbs, said he plans to introduce evidence at his client's sentencing hearing that she is a breast cancer survivor and suffered from depression.

Credit union head from East Alton admits embezzlement

 The former president of a credit union pleaded guilty to bank fraud and admitted using his bank position to cover up his theft from a trade association, federal prosecutors said Tuesday.

Paul C. Smith, 54, of East Alton, began working for the Laclede Community Credit Union in November 1977 and resigned as president on June 29, 2012, prosecutors said.

He was also treasurer of a credit union trade association.

Prosecutors say Smith used the association's credit card to get cash and make purchases totaling $58,286 from 2007 to 2012, then used the bank's computers to conceal the theft and ensure that the expenses would not be incurred by the association.

Smith was indicted Nov. 20 and pleaded guilty Monday.

Poor Oversight Blamed for $320K Embezzlement

Due to a lack of oversight at a small Illinois credit union, two employees were able to embezzle more than $320,000 in separate incidents that spanned many years, according to the U.S. Attorney’s Office.

Kimberly Kent, 53, a former manager at the $4.2 million Milledgeville Community Credit Union who also served as an elected official for a small Illinois town, was sentenced July 14 to eight months in federal prison for embezzling more than $220,000 from the credit union from 2005 to 2012, the court documents said.

In addition to prison, Kent was also sentenced to two years of supervised release and a $5,000 fine.

Kelsey Selman, 37, a former teller at the 850-member institution in Milledgeville, Ill., who admitted embezzling more than $100,000 from 2007 to 2012, was sentenced in May to two days in prison, three years of supervised release and a $4,000 fine, the documents said.

Assistant U.S. Attorney Scott R. Paccagnini, who prosecuted both cases, stated in court that the two women, who were among three employees at the credit union, took advantage of the institution’s minimal oversight.

In an interview with CU Times, Paccagnini said one of the most unusual aspects of the cases is that both women have already repaid the credit union for money stolen.

“Both of them paid back the money as they resigned,” he said.

In addition to $231,823.15 in restitution Kent already paid to the credit union, she was ordered to pay $10,176.72 in restitution to Milledgeville Community Credit Union and $5,278.75 to Wysox Township to cover investigative costs, Paccagnini said.

The latest two cases follow a string of internal fraud allegations recently uncovered at Illinois credit unions. Other recent cases include Paul C. Smith, a former president of Laclede Community Credit Union and former treasurer of a Illinois Credit Union League chapter, who recently pleaded guilty in U.S. District Court in St. Louis to using the chapter’s debit card for almost $60,000 in personal expenses over five years. Charles Juska, former president of the $25 million Tazewell County School Employees Credit Union in Pekin, Ill., recently pleaded not guilty to misapplying more than $500,000.

In the latest case at Milledgeville Community CU, both former employees pleaded guilty earlier this year.

In Selman’s plea agreement, the ex-teller confessed to applying fake credits to her personal account, which caused the credit union’s records to falsely reflect that her cash drawer increased by an amount to offset the deposit into her account.

In the other case, Kent, who also served as treasurer of Wysox Township, admitted in a plea agreement that she used fraudulent loans and town funds to conceal her fraud at the credit union.

Prosecutors say the contrast in sentencing is due to the extent of the crimes and the attempts to conceal the fraud.
Although Kent and Selman stole the money for personal use, Kent went to great lengths to conceal her crime and may have purposely covered up Selman’s fraud, the documents said.

To conceal her own fraud, Kent created fictitious loans and certificates of deposits using names of family members, the documents said.

After being elected treasurer of Wycox Township in 2009, Kent began using the town’s accounts at the credit union to cover her embezzlement, the plea agreement said.

For almost two years, she moved money into and out of Wysox Township’s accounts at the credit union, transferring a total of $175,000 from a township account to cover up her credit union fraud, the court records said.

After it became clear that the credit union would uncover her illegal activity, Kent resigned and provided information to the auditor.


Both women faced a maximum sentence of 30 years’ imprisonment, up to five years of supervised release and up to $1 million each in fines.

During the sentencing hearing for Kent, an attorney representing the former manager requested a lighter sentence due to Kent’s “good character, cooperation, payment of restitution in full prior to criminal charges being commenced and her psychological diagnosis,” the court documents said.

A doctor who testified at Kent’s sentencing said the former manager embezzled because she believed it was a family need and want, which stems from her family history, and that she would pay back the funds, the court documents said.

However, Kent and her defense team did not explain how someone with a diminished capacity could go to such great lengths to conceal their crime, the documents said.

In response, prosecutors cautioned the court to not overlook the fact that defendant committed the crimes over the course of many years.

Prosecutors said the sentencing needed to reflect the seriousness of the crime, promote

respect for the  law, provide just punishment for the offense and deter criminal conduct by others.

Although defendants may be entitled to lower sentences if they have a significantly impaired ability that causes lack of restraint to control wrongful behavior, there must be a link between the defendant’s diminished capacity and the commission of the offense to warrant a lower sentence, prosecutors said.

“While defendant characterizes herself as law abiding, she fails to account for the more than six years of her life that included the day-to-day, week-to-week, and month-to-month taking of monies from the credit union,” prosecutors stated in the court documents. “As a supervisor with no oversight, defendant’s actions went unchecked and the government has little doubt that but for the other employee’s embezzlement, defendant’s embezzlement would be ongoing to this day.”

Unlike Selman, who stole from her teller drawer and did not conceal her illegal activity, Kent created fictitious loans and certificates of deposit, and used other accounts and her position as an elected official and credit union manager to move money in order to hide her illegal activity.

“Such actions do not evidence someone operating with a diminished capacity,” prosecutors stated.                                              

“The government also notes that it is likely defendant knew of the other employee’s embezzlement and did nothing to avoid scrutiny on the credit union that would possibly reveal her own embezzlement,” the documents said. “The credit union’s system at times identified such large amounts of supposed cash on hand in the other employee’s teller drawer that defendant would have to have noticed.”

At one point, Kent electronically lowered Selman’s cash drawer amount, the documents aid.

In addition, Kent wrote the letter of resignation for Selman, which the former teller copied word for word, the documents stated.

During Kent’s sentencing, prosecutors also shot down another attempt for sympathy and leniency.

“The government has no doubt that defendant’s crime has brought unwanted community attention to her family and that her imprisonment will have an adverse impact on her family,” the court documents said. “An adverse impact on family is, sadly, a natural consequence of an individual’s decision to engage in criminal activity. When an individual is incarcerated, it is expected that his family life will suffer.”

Milledgeville Community Credit Union embezzlement brings 8-month term

A former manager of Milledgeville Community Credit Union, also a former Wysox Township treasurer, was sentenced to 8 months in federal prison for embezzlement and ordered to pay more than $15,000 in restitution.

Kim Kent, 53, pleaded guilty in February to embezzling $219,600 from October 2005 to February 2012. She also must pay a $5,000 fine, and serve 2 years of supervised release, the first 6 months on home confinement, according to a news release from the U.S. attorney's office in Rockford.

Kent must pay the credit union $10,176.72 and the township $5,278.75. She already has paid $231,823.15 in restitution, the release said.

To conceal her embezzlement, Kent created fictitious loans using names of family members and fictitious certificates of deposit. After she was elected treasurer of the Milledgeville-based township in 2009, she used money from the township's credit union account to cover her embezzlement.

In February, Kelsey Selman, 37, a former teller at the credit union, also pleaded guilty to embezzlement.

She was sentenced in May to 2 days in prison and fined $4,000, on top of the $100,975.74 in restitution that she paid to the credit union shortly after she was fired, court documents say.

Selman used the credit union's computer system to apply credits to her personal account, and so its records falsely showed that the money in her cash drawer increased by an amount to cover the fake deposits.

Ex-teller admits stealing $2M from Illinois bank

 A central Illinois woman has pleaded guilty to embezzling nearly $2 million from the bank where she worked as head teller.

Sixty-two-year-old Nancy J. Huskins of Lincoln pleaded guilty Thursday to one count of bank embezzlement in federal court in Springfield.

Huskins worked at the State Bank of Lincoln from 1996 until November of last year.

The U.S. Attorney's Office in central Illinois says she admitted stealing the money over that period and using it for her personal spending.

As head teller, Huskins had access to the bank's vault.

According to a news release from the U.S. Attorney's Office, she concealed the theft by manipulating audits.

Sentencing is scheduled for Nov. 10.

Huskins faces up to 30 years in prison and could be ordered to pay full restitution.

A Lincoln woman pleaded guilty in federal court Thursday to embezzling nearly $2 million from the bank where she was employed.

Nancy J. Huskins, 62, pleaded guilty to a single count of bank embezzlement before U.S. Magistrate Judge Thomas Schanzle-Haskins in Springfield.

Huskins, the former head teller at State Bank of Lincoln, admitted that from Jan. 1, 1996, to Nov. 4, 2013, she embezzled approximately $1,982,685 for her personal use.

In her position as head teller, she had access to the bank's vaults and was entrusted with significant access to portions of the vault where large amounts of cash were held.

Huskins admitted during her court appearance and in court documents that she disguised the embezzlement by personally participating in audits of cash amounts, representing that a certain bag contained an amount of currency when she knew the bag contained no currency, just other empty currency bags.

The investigation was conducted by agents of the FBI with full cooperation from State Bank of Lincoln. The case is being prosecuted by assistant U.S. attorney John Childress.

Huskins' attorney, Daniel Noll of Springfield, said he couldn't discuss any reasons for his client’s embezzlement.

"She has been cooperating with authorities and looks to put this matter behind her," Noll said.

Huskins currently is on bond awaiting sentencing. She faces a maximum penalty of up to 30 years in prison when she is sentenced Nov. 10 by U.S. District Judge Sue Myerscough. She’ll also be ordered to pay restitution.

"This was a very unfortunate situation for everyone, including the family of our former employee," said Steve Aughenbaugh, president and CEO of State Bank of Lincoln. "Despite the wrongdoing, there has been no misuse of customer accounts, so customers can rest assured their deposits are safe and accounted for."

Aughenbaugh said all employees of the bank are bonded "in an amount considerably in excess of this embezzlement."

Former credit union employees plead guilty to embezzlement

Two former employees of Milledgeville Community Credit Union have pleaded guilty to embezzling money in separate cases.

As part of a plea agreement, Kim Kent, 53, the credit union’s former manager, pleaded guilty Monday in federal court in Rockford to embezzling $219,600 from October 2005 to February 2012.

And former credit union teller Kelsey Selman, 37, admitted that she embezzled $100,975 from the credit union, according to a news release from Zachary T. Fardon, U.S. Attorney for the Northern District of Illinois and Robert J. Holley, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.

Each woman faces a maximum penalty of up to 30 years in prison, followed by five years of supervised release, and a fine of up to $1 million.

Kent’s sentencing is set for June 2; Selman’s will be May 7.

To conceal her embezzlement, Kent created fictitious loans using names of family members and fictitious certificates of deposit, according to the news release.

In 2009, she was elected supervisor of the Milledgeville-based Wysox Township. She used money from the township’s credit union account to cover her embezzlement, the release said.

Selman, 37, used the credit union’s computer system to apply credits to her personal account that did not have a corresponding deposit, the release said. As a result, the credit union’s records falsely reflected that Selman’s cash drawer increased by an amount to offset the deposit into her account.

Wysox Clerk Laurie Byvick said Monday that she wasn’t aware that the women had pleaded guilty.

“I knew it would happen eventually, but didn’t know when,” Byvick said in an interview.

Todd Ewers, chairman of the credit union’s board, said the two women “totally” repaid the institution.

“This was well thought-out. This wasn’t simply taking money,” he said, adding that the women’s crimes were not connected.

Ewers, who was the supervisory committee chairman when the women committed the crimes, said the credit union was glad “that justice is finally being served.”

In March 2012, the Wysox board voted unanimously to accept Kent’s immediate resignation. The board then voided all checks issued by Kent.

In a December 2012 interview, Milledgeville Police Chief Jim Haag said he started looking into the problems in the township and credit union in March of that year. He said he identified misuse of funds at both places.

In August 2012, he said, he got a call from an FBI agent who was investigating. At the time, the FBI wouldn’t confirm the investigation with Sauk Valley Media.

The credit union, chartered in 1957, had $3.8 million in assets as of late 2012, according to the state. It has about 900 members.

Credit Union CEO Sentenced in Embezzlement Plea Deal

Anne Schaal, the former president/CEO of the $1.9 million, 492-member Aurora Firefighters Credit Union, will spend 30 days in jail for embezzling more than $36,000 from the Aurora, Ill.-based institution.

Schaal was also sentenced to 150 days in electronically-monitored home detention and three years on probation for the criminal activity that took place between January 2006 and November 2011, according the Kane County Attorney’s office in St. Charles, Ill.

As part of a plea deal with the Kane County prosecutors, the 67-year-old Schaal pleaded guilty to one felony count of theft on Feb. 14 in Kane County Court.

A gambling addiction led Schaal to steal from the credit union as well as lose more than $580,000 that belonged to her and her husband, according to The Daily Herald, a Chicago suburban newspaper. In court documents, according to the newspaper, Schaal acknowledged that she became addicted to gambling.

The former CEO also was ordered to pay more than $4,000 in fines, to undergo a psychological evaluation and to have no contact with the credit union, according to the Kane County State’s Attorney office and local media reports.

Schaal was arrested September 2012 on theft and misuse of credit card charges. At that time, she denied the charges and was scheduled to stand trial in March.

The Aurora Firefighters CU also filed a civil lawsuit against Schaal, claiming she stole the money and posted “phantom payments” to the credit union’s ledger, according to The Daily Herald, a suburban Chicago newspaper.

The lawsuit was dismissed in September 2013 after the credit union and Schaal agreed to an out-of-court settlement.

Though Schaal made a payment to the credit union to settle its claims for damages, a lawyer representing Aurora Firefighters CU declined to say how much Schaal has paid, The Daily Herald reported.

Former Bank President Creates Fictitious Loans to Conceal Embezzlement in Illinois

Bryson John Russell, 66, Lincoln, Illinois, former president of a Logan County bank, was sentenced by U.S. District Judge Richard Mills to serve 30 months in federal prison for embezzling more than $500,000 from Hartsburg State Bank and hiding it by creating loans in the names of various customers and relatives.

Russell was ordered to pay restitution to the bank in the amount of $562,293, and was ordered to self-report on a date to be determined by the federal Bureau of Prisons to begin serving his prison sentence. Russell was also ordered to remain on supervised for three years following his release from prison.

On Feb. 27, 2013, Russell waived indictment and entered a plea of guilty to a single count of embezzlement as charged in an information filed by the U.S. Attorney’s Office for the Central District of Illinois. Russell admitted that in 1992, he began taking cash from the bank to pay for personal items and obligations. Russell became bank president in 1989 and was a career employee, having begun work in 1966 at Hartsburg State Bank, Hartsburg, Ill.

At some point, to conceal his activity, Russell began creating bank loans in the names of various bank customers, including relatives. When the various loans were due, Russell created different, larger loans in relatives’ names and other bank customers’ names to pay off the loans, as well as to embezzle additional money. In addition, Russell admitted cashing a customer’s $15,000 certificate of deposit and applying the proceeds to a loan he had created in the customer’s name.

The charges were investigated by the Federal Bureau of Investigation in coordination with the Hartsburg State Bank. Assistant U.S. Attorney Patrick D. Hansen prosecuted the case.

Former Hartsburg State Bank president headed to federal prison in Illinois

Bryson John Russell, 66, of Lincoln pleaded guilty in February to stealing money from the bank, starting in 1992, three years after he was named president. In documents filed in U.S. District Court in Springfield, prosecutors outlined 19 loans Russell took out starting in 2001 in the names of various bank customers. The loans ranged from $1,000 to $124,000.

“When those loans became due, Russell would create different, larger loans in names of relatives and other bank customers to pay off those due, as well as to embezzle additional money,” according to a sentencing commentary written by Assistant U.S. Attorney Patrick Hansen.

The former bank executive also cashed a $15,000 certificate of deposit belonging to a bank customer and applied the proceeds to a loan he had taken out in another customer’s name, according to Hansen.

After he was removed as president, Russell agreed to answer federal investigators’ questions about shortfalls in accounts with a Texas bank that handled deposits and payments to other financial institutions on behalf of the Hartsburg bank.

Russell admitted to making false entries to cover up for cash he took from the bank’s vault, according to court documents.

The loss involved more than money, the prosecutor said in his sentencing comments.

“It is incredibly troubling when the perpetrator is in charge of all of the daily operations of the bank. Particularly in a small town, such as Hartsburg, the trust of the citizens is critical for the operation of a financial institution.”

Given the condition of Russell’s personal finances, it is unlikely he will be able to make full restitution, the prosecutor noted.

Officers at failed Wilmette, Illinois bank charged with fraud

Four former directors and officers of a failed Wilmette bank have been charged with defrauding the U.S. government, including using $6.8 million from the bank-bailout program to keep their alleged criminal enterprise running.

It’s the first time that a TARP bank has been charged with running a criminal enterprise, according to the governing body for the Troubled Asset Relief Program, or TARP. Records show other banks that received bailout money have previously been charged with fraud.

Zulfikar Esmail, 70, of Evanston, the bank’s former chairman, was among those formally arraigned today in Cook County Criminal Court for his role in the alleged scheme at $269 million-asset Premier Bank, which failed in March 2012.
The Federal Deposit Insurance Corp. estimated that its failure would cost the fund – which is financed by other banks -- $64 million. In January 2009, Premier received $6.8 million from the U.S. Treasury Department’s Troubled Asset Relief Program, which was supposed to go to only healthy banks. Among other things, the indictment said that the bank misrepresented its financial condition to regulators, making Treasury believe that it was healthier than it was.

Illinois Attorney General Lisa Madigan said Esmail engaged in a “criminal shakedown scheme, soliciting and demanding bribes in connection with applications made for business loans and lines of credit” to open and operate several Michael’s Fresh Market grocery stores in Chicago and the suburbs. The lawsuit, filed by the state of Illinois, alleges that Esmail demanded that his children be given ownership stakes in the stores in exchange for the loans.

Charges against Esmail include financial institution fraud, theft by deception, commercial bribery of a financial institution, and conspiracy to commit a financial crime. He faces a mandatory prison sentence for theft by deception and being organizer of a financial crimes enterprise, which each carry a mandatory prison sentence of six to 30 years. His remaining charges are punishable by four to 15 years.

Other defendants are Shamim Esmail, 65, of Evanston; Robert McCarty, 51, of Geneva; and William Brannin, 53, of Chicago. Charges against them include continuing a financial crimes enterprise and conspiracy to commit a financial crime, each punishable by four to 15 years in prison. They also face charges of theft by deception, which has a mandatory prison sentence of six to 30 years.

The Esmails have been released on a collective $500,000 bond, according to Illinois attorney general Lisa Madigan. McCarty was released on a $400,000 bond and Brannin on a $350,000 bond.

The four have separate lawyers.

“Shamim is not guilty of the charges in the indictment,” said her lawyer, Mark Rotert, of Stetler Duffy & Rotert in Chicago. “We intend to demonstrate that at trial and look forward to clearing her name.”

Attorneys for Brannin and Esmail also said their clients were innocent.

“If criminal cases were proved in press releases, the attorney general would be a champion, but they’re not,” said Chris Gair, the lawyer for Zulfikar Esmail, referring to Madigan's written statement.

The former chairman of failed Premier Bank in Wilmette, along with his wife and two other defendants, have been indicted in Cook County Criminal Court on fraud charges in what was described as the first case in the country accusing former bank officers and directors of running a "criminal enterprise" to defraud the federal bank bailout program.
Dr. Zulfikar Esmail, 70, of Evanston, a medical doctor who launched the bank in 2000, is charged with financial institution fraud and being the organizer of a financial crimes enterprise, according to the indictment, brought by Illinois Attorney General Lisa Madigan's office. If convicted, he faces mandatory jail time of six to 30 years.
Also charged were his wife Shamim Esmail, 65, and two board members: Robert McCarty, 51, of Geneva, and William Brannin, 53, of Chicago. They each face two sets of charges, one that would mandate prison time of six to 30 years and the other that would mean possible prison time of four to 15 years.
(Read the indictment at the end of this story.)
The four were arrested at their homes last month and released after posting bonds.
At his arraignment today, Dr. Esmail pleaded innocent, said his attorney, Chris Gair.
"There is no evidence of wrongdoing by Dr. Esmail and this is overreaching by the Illinois attorney general's office. We're going to be looking forward to establishing Dr. Esmail's innocence," Mr. Gair said.
Ms. Esmail's attorney, Mark Rotert, said "She isn't guilty of the charges in the indictment. She intends to defend herself and we're looking forward to clearing her name."
The Esmails were accused of defrauding the Treasury Department out of $6.8 million in bailout funds issued under the Troubled Asset Relief Program (TARP). In addition to the lost taxpayer funds, when Premier Bank failed last year, it cost the Federal Deposit Insurance Corp.'s insurance fund an estimated $64.1 million.
According to the indictment, the Esmails engineered a scheme to “shake down” one of the bank's biggest borrowers, requiring that he hand over equity interests in some of his projects to the Esmails' grown children as a condition for obtaining loans to expand.
George Dernis, former owner of the Michael's Fresh Market chain of grocery stores, had made similar allegations in a civil lawsuit he brought last year against the Esmails.
The indictment also accused the Esmails of concealing the condition of the bank from state banking regulators by, among other things, lending money to borrowers to buy out the failing projects of other borrowers. That enabled the bank not to have to disclose certain loans as delinquent on its quarterly reports of its financial condition.
Mr. Esmail also allegedly improperly charged the bank for construction work done on his home and some rental properties he owned, according to the indictment.
“Esmail, the former chairman of TARP recipient Premier Bank, stands charged of orchestrating a criminal enterprise by using Premier Bank as his personal fiefdom and of exploiting TARP to finance an alleged long-running criminal enterprise while fattening his own pockets at the expense of customers and federal taxpayers,” said Christy Romero, special inspector general for TARP, in a release.
In the release, Ms. Madigan said the defendants used “taxpayer funds to further their own shakedown scheme at a time when our country was on the brink of disaster.”
Also participating in the investigation was the FDIC's Office of Inspector General.
Attorneys for the other two defendants didn't respond to requests for comment.

INDICTMENT:
http://www.scribd.com/doc/158521827/Premier-Bank-Indictment

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.

Former Illinois bank president admits embezzlement

The man who was president of a small-town central Illinois bank has pleaded guilty to embezzlement.
Bryson John Russell of Lincoln started working at Hartsburg State Bank in Logan County in 1966. He became bank president in 1989. On Thursday, federal prosecutors said he admitted he stole money from the bank to pay for personal expenses. Officials say Russell did it by taking out loans in the names of bank customers and relatives.
Federal officials say the bank's total loss is between $376,000 and about $562,000. Hartsburg is about 35 miles south of Peoria. It has a population of 314.
Russell is scheduled to be sentenced on June 27. He faces up to 30 years in prison and a $1 million fine. He also may be ordered to pay restitution.

Two ex-tellers get probation in separate bank theft cases in Illinois

Two former tellers involved in separate thefts while working for a Holiday Shores bank have been given probation and orders of restitution to pay back thousands of dollars.
The second of the tellers, Jamie L. Gajewski, was accused of stealing nearly $90,000. She pleaded guilty Tuesday to felony theft in exchange for a sentence of three years of probation.

Authorities said the deal was made possible, in part, by the willingness of Robert Behme, owner of Behme's Market in Holiday Shores, to go along with it.

Behme told authorities he felt sorry for the defendant and just wanted his money back.

Gajewski, 29, of the 1200 block of Nassau Drive, Holiday Shores, pleaded guilty in Madison County Circuit Court to one felony count of theft over $10,000, a Class 2 felony punishable by up to seven years in prison.

She had no previous criminal record.

Gajewski was a teller at First National Bank of Staunton, Assistant Madison County State's Attorney Rachelle Crowe said.

In a statement read in court, Crowe said that, had there been a trial, store employees, police and bank officials would have testified and proved that the store employees were taking the bank deposits to the bank each evening, but Gajewski was pocketing some of the money.

Gajewski would make up a deposit slip to cover the difference between the amount put in the account and the amount the employees took to the bank.

The thefts occurred between January 2011 and Jan. 23 of this year. Behme started noticing shortages in the store's account and asked police to investigate. Crowe said the investigation revealed all the short transactions were traced to Gajewski as teller.

The Madison County Sheriff's Department handled the investigation.

Gajewski was charged in March. The original charge alleged she took $37,000, but a further investigation set the amount at nearly $90,000.

Circuit Judge Richard Tognarelli accepted the agreement for the three years of probation and set the restitution at exactly $89,923. Gajewski also will have to pay court costs and the cost of probation.

The defendant posted $6,000 cash bond shortly after she was charged and has remained free on bond since.

Gajewski was represented by defense attorney John Stobbs of Alton.

"She is very sorry for what she did, and she is thankful that the victim was willing to go along with the agreement," Stobbs said. "For the rest of her life, she will have a felony on her record, and that will make it very difficult to get another job."

Gajewski was the second teller this year to be charged in a major theft case involving the Holiday Shores branch of the bank.

Lori A. Surgant, 51, also of Holiday Shores, was charged Feb. 7 and pleaded guilty in July.

Surgant was accused of stealing more than $7,000 from the bank, which reported suspicions to the Sheriff's Department after an internal audit.

She was ordered to pay $7,246 in restitution as part of her plea agreement.

In Surgant's case, the Sheriff's Department initially was contacted Jan. 26. Sheriff's Department officials said their investigation showed Surgant was suspected of stealing the money from Nov. 1, 2011, through Jan. 20 of this year.

The thefts reportedly occurred during Surgant's normal shifts as a teller and initially were discovered because of a shortage in her drawer.

Surgant worked at the bank for eight years.

Bank Manager Sentenced to Three Years in Federal Prison for Embezzlement in Illinois

Senior U.S. District Judge Richard Mills today sentenced a former manager of a Petersburg bank, Stephen R. Bradley, 65, to serve 36 months (three years) in federal prison for embezzling from his employer. Bradley was also ordered to pay restitution in the amount of $975,102.50. Bradley was ordered to report to the federal Bureau of Prisons on a date to be determined by the BOP to begin serving his prison term. Following completion of his prison sentence, Bradley was ordered to remain under supervised release for a period of five years.




On Jan. 21, 2011, Bradley waived indictment and entered a plea of guilty to an information charging him with one count of embezzlement. Bradley admitted that he embezzled approximately $834,945 from January 2003 to March 1, 2010, while he was an employee of Petefish Skiles & Co. Bank in Petersburg, Illinois. The court also found that Bradley had embezzled an additional $140,157.50 from the bank in other accounts.



The charge is the result of an investigation by the Federal Bureau of Investigation, in cooperation with the bank. The case was prosecuted by Assistant U.S. Attorney Jason M. Bohm

Suburban bank official arrested in Dominican Republic with stolen $40K in Illinois

A 25-year-old assistant bank manager from Palos Hills was arrested in the Dominican Republic Saturday with nearly $40,000 in cash stolen from a bank vault earlier in the day, FBI officials said today.




Blazej M. Wasilewski, of the 10300 block of South Alta Drive in the southwest suburb, was charged in U.S. District Court with bank embezzlement, a felony, according to a press release issued by FBI officials.



Wasilewski is currently in the Dominican Republic awaiting extradition, officials said.



Wasilewski, an assistant manager from the south suburban Glenwood Chase bank branch, 18701 S. Halsted St., was able to manually turn off the bank 's electrical power on Friday evening as the bank was closing for the day, according to the criminal complaint filed Monday.



Early Saturday morning, Wasilewski allegedly returned to the bank and was able to use his keys and alarm codes to enter the bank, deactivate the alarm and open the vault, officials said.



The money was discovered missing when bank employees conducted an audit of the bank on Saturday morning after employees noticed that one teller cash dispenser was missing and a second dispenser been forced open and emptied of money, officials said.



The audit found that $39,765 was missing and Wasilewski was the suspected thief after his bank issued entry key was found sitting on a counter inside the bank and the bank's security system indicated that his code had been used to enter the bank and the vault, officials said.



Wasilewski could not be found when the bank manager tried to reach him Saturday morning, officials said.



FBI officials were able to track Wasilewski to O'Hare International Airport, where records indicated that he had boarded a flight Saturday morning from Chicago to Punta Cana in the Dominican Republic, officials said.



He was arrested Saturday evening by officers of the Dominican National Police as he tried to enter that country with $39,765 he did not declare to Dominican customs officials, according to the complaint.



Once he is extradited, he is expected to appear in U.S. District Court where he will be formally charged. He faces up to 30 years in prison if convicted, officials said.

Bank orders internal review in Illinois

A Jersey State Bank officer said Monday that the bank has placed an employee on administrative leave and has ordered an internal review.




"In response to the findings of our regular audit procedures, Jersey State Bank officials have begun an internal review and put an employee on administrative leave," Jersey State Bank President Larry Anderson said in a media statement sent Monday to the Telegraph. "Because this review is ongoing, we cannot provide additional details at this time."



The media statement was in response to a Telegraph call to Anderson regarding reports that the Jersey State Bank had an employee escorted from the facility last Thursday by federal agents for alleged embezzlement. People calling The Telegraph gave the name of the employee allegedly involved, but because no charges have been filed, the newspaper will not release it.



Anderson returned The Telegraph’s phone message late Monday and said the media statement he was preparing would have to suffice for now, and that he could not comment further.



"We do want to reassure Jersey State Bank customers that no individual or business accounts have been compromised, and our capitalization is secure," he said. "We are taking this issue extremely seriously and will be cooperating fully with all authorities in this review."



As of Monday morning, Jersey County State’s Attorney Ben Goetten said while he had heard the same rumors over the weekend, he had not been notified officially by the bank or the U.S. Attorney’s Office in East St. Louis about any local investigation.



Catherine Rodick, press spokeswoman for the U.S. Attorney’s Office for the Southern District of Illinois in East St. Louis, said when contacted Monday that she would relay The Telegraph’s questions to the appropriate officer. As of Monday night, no return call had been received.

‘Robin Hood’ banker gets 63 months for fraud in Illinois

First Security Trust & Savings Bank loan officer Jeffrey Gonsiewski, pleaded guilty in August to one count of federal bank fraud, was sentenced to 63 months in prison by U.S. District Judge Elaine Bucklo on Tuesday.


The U.S. Government last summer had accused the 56-year-old high school graduate of changing loan terms or arranging loans to be made in a scheme that ultimately caused the Elmwood Park-based lender, part of the Wirtz family empire, to lose more than $5.5 million.

Some monies have since been recovered, so Gonsiewski now has been ordered to pay nearly $5.2 million in restitution. On Jan. 20 he’ll report to a still-unspecified prison.
Gonsiewski had admitted that he changed the terms of at least 100 loans for more than 50 struggling borrowers to make it appear that their payments were current when in fact they were overdue. He’d change due dates to a later time period, or monthly payments to quarterly ones, or principal-and-interest payments to interest-only payments.



At least once, he wrote off $100,000 in interest owed by one borrower. Or he’d loan more money even when the borrowers didn’t have sufficient collateral.



In documents filed Monday with the court, Gonsiewski’s lawyer, Terrence LeFevour, said the crime on his client’s part was “an idiotic attempt to assist his clients, hoping that with extensions of their loans by deceit, eventually these clients would” repay the bank when the economy would improve and the property would be sold.



“As stupid as his plan can be judged, he never sought to profit from it,” his lawyer wrote, adding that he “never took one cent from anybody.”



Gonsiewski, who after spending more than 30 years at the bank now works as a caterer’s helper and a stock boy and also recently as a delivery driver, told the judge before his sentencing that he was “truly sorry.”



“I really only had good intentions,” a bearded, balding and bespecled Gonsiewski said softly. “I spent 34 years doing a job I loved.” He said he has also apologized to family and friends, particularly his wife, Beth, who was one of only a handful of people to attend the sentencing.



If Gonsiewski was indeed helping troubled bank borrowers, few if any showed up to express their appreciation during his sentencing in a U.S. District Court in Chicago. Both Jeff and Beth declined to comment afterward. Beth, with short hair and wearing a black suit and white shirt, retained her composure throughout the proceedings, as did Jeff.



A spokesman for the Wirtz family bank, Guy Chipparoni, was also in attendance.



In the courtroom, the government’s lawyer said Gonsiewski carried out his scheme from September 2004 to February 2009.



In a sentencing hearing that lasted about 45 minutes, the topic of Gonsiewski’s motive came up frequently.



Jackie Stern, the government lawyer, told the judge that she still isn’t positive what Gonsiewski’s motive was, speculating that perhaps he wanted “more authority” or “revenge” or felt unappreciated. The government uncovered no evidence that Gonsiewski personally profited from the scheme, she acknowledged.



Judge Bucklo also seemed baffled by Gonsiewski’s behavior in light of the fact that he didn’t appear to profit personally from it. His salary at the bank was $69,000 a year; his wife has worked as a bartender and as an assitant manager at a restaurant.



It came to light during the sentencing hearing, in fact, that there were times when Gonsiewski didn’t cash his paychecks from the bank, which led the judge to one of two conclusions: that he had money elsewhere or that he was mentally unbalanced, she theorized.



“He’s very sharp,” Stern told the judge of Gonsiewski, adding that he eventually did cash the paychecks.



Besides “motive is not a factor to be considered” during sentencing, Stern said to the judge. “The fact he did this, whatever the motive, he had no respect for the law.”



Since he was fired by the bank, Gonsiewski hasn’t sent so much as $20 to the bank as restitution, Stern said.



Gonsiewski’s lawyer, LeFevour, reiterated that his client isn’t hiding any money in any offshore accounts.



Said the judge: “It doesn’t make any sense.”



LeFevour, the defense lawyer, said Gonsiewski rarely even socialized with the bank’s clients, perhaps just once going out to dinner or golfing with them. He noted that his client has problems with alcohol.



Preparing to issue a sentence, the judge noted that a small bank lost $5.5 million because of fraud perpetrated by an insider over a long time period.



“It’s just baffling,” Judge Bucklo said again. “How it would be worth it I just do not understand.” She noted that he has about $400,000 in a retirement account. “That’s not peanuts,” she said.



In a court filing on Monday, LeFevour said Gonsiewski had no juvenile or adult convictions. He also wrote that the bank did a poor job of overseeing its workers.



“His simple efforts to deceive would not have been successful at all if someone at a minimum had been watching, just a little bit,” LeFevour wrote. “This was clearly not the case at First Security Bank.”



The defense lawyer sought to minimize the sophistication of Gonsiewski’s crime in hopes that the judge would go easier on him. “Gonsiewski used the simple tools of basic fraud — a pen and whiteout, or a replacement form — to complete his misguided efforts to help his clients,” his lawyer wrote Monday in a court filing.



In an earlier court proceeding, a bank customer named Luigi Adamo was identified as being the customer who was helped most often by Gonsiewski.

Petersburg bank president says embezzlement charges won't affect bank in Illinois

The president of Petefish, Skiles & Co. said Wednesday that embezzlement charges against a former employee “will have no significant impact on the bank.”

Thomas Prather released the statement a day after former Petersburg bank manager Stephen Bradley, 64, of Petersburg, was charged in federal court with embezzling nearly $835,000 from January 2003 to March 1, 2010.
According to the bank, Bradley joined the Petersburg bank in 2000 and was terminated in March this year.
“All banks are required to have insurance for these types of situations. The bank has worked closely with the victims directly involved in the embezzlement to help minimize the harm done to them and insures a full recovery of any loss,” Prather said in the statement.
Prather said the embezzling involved creation of fraudulent loans and misappropriation of funds.
In addition to Petersburg, the bank has offices in Virginia, Tallula, Greenview, Chandlerville and Havana.

Illinois Bank exec accused in $2.4M fraud

A Chicago Ridge man was accused Thursday of fraudulently selling his bank customers promissory notes totaling $2.4 million, then using the money to gamble at casinos, renovate his home and make credit card payments.


Beginning in 2002 and lasting until January 2009, banking executive Glenn J. Kozeluh obtained money from customers by falsely stating the money would be placed as investments to collateralize loans to buy small banks, according to a criminal complaint filed in U.S. District court.

Instead, Kozeluh used the money for personal expenses, the complaint said.

To lull the customers into a false sense of security, Kozeluh would also use the money to make interest payments and pay principal owed to existing promissory note holders, according to the complaint. He would create fake life insurance documents and then offer to customers additional collateral by assigning the insurance policy proceeds should his death occur before repayment of the promissory notes.

According to the charges, promissory note holders suffered losses totaling at least $2.4 million.

Currency exchange employee allegedly made off with nearly $10K in Chicago

A long-time employee of Harlem & 159th Street Currency Exchange allegedly stole more than $9,800 from the store through 12 transaction performed for customers between July 30 and Oct. 1.




According to Tinley Park Police, the money was reported stolen from the store after the transactions were discovered when the woman didn’t return to work on Oct. 4.



The latest transaction was made on Oct. 1 when $1,000 was stolen. Police say it appears the employee entered amounts higher than requested by customers and then kept the excess cash.



The woman worked at the store for 10 years and hasn’t reported to work since Oct. 1, police said Monday.