US banker arrested over fraud allegations

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This was published 14 years ago

US banker arrested over fraud allegations

Charles Antonucci is accused of trying to cash in on a program to rescue banks, writes David Glovin.

Charles Antonucci, the former president of the Park Avenue Bank in Manhattan, which regulators closed last week, has been arrested and charged with lying in an application for federal bailout funds and scheming to gain control of the bank.

Prosecutors said Mr Antonucci was the first person charged with trying to defraud the US Troubled Asset Relief Program, enacted by Congress to rescue banks. He was arrested on Monday morning and appeared in federal court in Manhattan. He was released after posting a $US2 million ($2.2 million) bond.

Mr Antonucci lied to the Treasury Department about Park Avenue's capital in the bank's application for an investment of $US11.2 million from TARP, according to a 10-count federal complaint. The bank withdrew the application when it came under scrutiny.

''Lying to financial regulators is the economic equivalent of obstruction of justice,'' the US attorney Preet Bharara said.

Mr Bharara and the TARP special inspector-general Neil Barofsky said they expected others to be charged with fraud in TARP-related cases.

The New York State Banking Department closed Park Avenue Bank on Friday and appointed the Federal Deposit Insurance Corp as receiver. The agency entered into a purchase-and-assumption agreement with Valley National Bank of New Jersey, which will take over $US494.5 million in deposits.

US lenders are collapsing at the fastest pace in 17 years amid losses on residential and commercial real estate loans made at the height of the market. In the fourth quarter the incidence of ''problem'' banks was the highest since 1992. The chairwoman of Federal Deposit, Sheila Bair, said last month that failures this year would exceed the total last year of 140.

Mr Antonucci's lawyer, Charles Stillman, said after the court appearance that he would plead not guilty. Stillman was still considering an ''appropriate response to the charges''.

At the centre of Mr Antonucci's case is a $US6.5 million transaction he structured in 2008 after regulators deemed the bank undercapitalised, prosecutors said. Mr Antonucci offered to inject $US6.5 million of his money to bolster its finances.

The $US6.5 million came from the bank and had been lent to companies Mr Antonucci controlled, which then transferred the money to him. It was the ''functional equivalent of monopoly money'', Mr Bharara said.

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Mr Antonucci is also accused of orchestrating a bank loan to a company he secretly controlled, Easy Wealth Group, and allowing entities owned by an accomplice, who is not named in the complaint, to receive millions of dollars in loans and overdraft funds. In return, his accomplice gave Mr Antonucci use of an aircraft to fly to the Super Bowl and the Masters Golf Tournament, and access to the accomplice's accounts so Mr Antonucci could funnel money to himself, prosecutors said.

The banker is further accused of defrauding two pastors at a church in Florida, by getting them to transfer $US103,000 to a bank account he controlled and using bank money to lease properties he owned in Fishkill, New York.

In Colorado on Monday Carlos Peralta, who prosecutors said held himself out as chief executive of a bank affiliate, was arrested and accused of conspiring with Mr Antonucci in the scheme to defraud the pastors.

Mr Antonucci, who was arrested at his home in Fishkill, left the bank on October 30. He was paid about $US250,000 a year, prosecutors said.

The bank was set up in 1987 and in 2004 had four retail branches in Manhattan and Brooklyn, according to court papers. It had 66 employees on December 31, extended small commercial and real estate loans and held customer accounts.

Last March Mr Antonucci submitted a request to regulators to take control of the bank after acquiring 52 per cent of the shares in its holding company. Five months earlier he held only 1.4 per cent of the same stock.

The case began about five months ago when the Immigration and Customs Enforcement office was tipped off that Mr Antonucci was trying to structure an illegal business deal in Ecuador. Other investigators, including the FBI, also zeroed in on him.

Bloomberg

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