Banker Busted - Ripping Of TARP.
Former New York Bank President First Charged With Attempting To Defraud TARP
Bank Seized To Protect $500 Million In Deposits.
PREET BHARARA, the United States Attorney for the Southern District of New York, NEIL M. BAROFSKY, the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), JAMES T. HAYES, JR., the Special Agent-in-Charge of the New York Office of the Department of Homeland Security Bureau of Immigration and Customs Enforcement (“ICE”), RICHARD H. NEIMAN, the Superintendent of the Banks of New York (“NYSBD”), GEORGE VENIZELOS, the Acting Assistant Director in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”),and JON T. RYMER, Inspector General of the Federal Deposit Insurance Corporation (“FDIC-OIG”), announced the arrest of CHARLES J. ANTONUCCI, SR., the former President and Chief Executive Officer of the Park Avenue Bank, on allegations of self-dealing, bank bribery, embezzlement of bank funds, and fraud, among others. ANTONUCCI also was alleged to have attempted to fraudulently obtain more than $11 million worth of taxpayer rescue funds from the Troubled Asset Relief Program, or TARP. ANTONUCCI is the first defendant ever charged with attempting to defraud TARP. Additionally, ANTONUCCI was alleged to have used the Park Avenue Bank in a scheme to defraud two pastors of a Florida congregation out of more than $100,000 set aside to build a new church.
ANTONUCCI was arrested in Fishkill, New York. He is expected to appear in Manhattan federal court.
On the evening of Friday, March 12, 2010, the NYSBD seized The Park Avenue Bank and appointed the FDIC as receiver; FDIC has arranged for the sale of The Park Avenue Bank.
According to the Complaint unsealed in Manhattan federal court:
The Park Avenue Bank
The Park Avenue Bank was a federally insured bank headquartered at 460 Park Avenue, New York, New York, with retail branches in Manhattan and Brooklyn. The bank’s clients consisted primarily of small businesses, for whom the bank made loans, extended lines of credit, and maintained depository accounts. As of the end of 2009, the bank had approximately $500 million on deposit, and over $520 million in assets. ANTONUCCI served as President and Chief Executive Officer (“CEO”) of The Park Avenue Bank from June 2004 to October 2009, and also served on its Board of Directors.
The Park Avenue Bank was federally-insured and regulated by the FDIC. Also, as a bank chartered under the laws of New York State, The Park Avenue Bank was regulated by the NYSBD. The bank was required to make certain regular disclosures to these regulators demonstrating that it was financially sound and that it had adequate capital.
FDIC and NYSBD regulations require banks such as The Park Avenue Bank to maintain certain levels of capital, as a percentage of the bank’s total assets. Banks that do not maintain appropriate levels of capital are subject to various restrictions on their activities, and may be required by regulators to raise additional capital. Banks which do not meet minimum capital requirements can be closed by the NYSBD or the FDIC.
The Park Avenue Bank was also an applicant to the Capital Purchase Program of the Troubled Asset Relief Program (“TARP”). The purpose of TARP was to provide funds to stabilize and strengthen the nation’s financial system by increasing the capital base of viable institutions, enabling them to increase the flow of financing to U.S. businesses and consumers. TARP funds were made available to qualifying banks; one of the critical elements of the TARP qualification process was the capital position of the applicant bank.
Self-Dealing, Bank Bribery, And Embezzlement
The Complaint alleges that ANTONUCCI engaged innumerous instances of self-dealing while President and CEO of The Park Avenue Bank, including authorizing extensions of credit and overdrafts to customers with whom he had financial relationships; authorizing extensions of overdraft credit to a customer in exchange for the use of the customer’s private plane; and causing the bank to make improvements on, lease, and pay expenses for properties owned by ANTONUCCI.
The Easy Wealth Line Of Credit
ANTONUCCI used a company he owned, Easy Wealth Group, Ltd. (“Easy Wealth”), to fraudulently obtain funds from _ e Park Avenue Bank. ANTONUCCI could not authorize the extension of credit by The Park Avenue Bank to his own company without violating the bank’s rules against self-dealing.
Accordingly, to mask his interest in Easy Wealth, in early 2006, ANTONUCCI approached an associate and offered to make him president of Easy Wealth (the “Easy Wealth president”), with the understanding that his first order of business would be to apply for a line of credit from _ e Park Avenue Bank.
The Easy Wealth president applied for a line of credit from The Park Avenue Bank in the amount of $300,000. ANTONUCCI personally approved the line of credit and later increased it to$400,000. ANTONUCCI even assisted the Easy Wealth president in preparing the line of credit application documents. The application as submitted contained numerous misrepresentations, including false statements concerning the Easy Wealth president’s personal assets and a fabricated business plan that contained false information about Easy Wealth’s financial condition and earnings. After the Easy Wealth president had drawn down the line of credit, ANTONUCCI approached him and demanded that he pay$70,000 to ANTONUCCI in the form of interest-free loans. ANTONUCCI only repaid $50,000 of the money. Easy Wealth ultimately defaulted on the fraudulently obtained line of credit, causing a loss to The Park Avenue Bank of $400,000.
The Oxygen Overdrafts
ANTONUCCI also approved approximately $8.5 million worth of over- drafts at The Park Avenue Bank to companies (the “Oxygen-related entities”) controlled by a co-conspirator(“CC-1”), who was a close associate of ANTONUCCI’s. Through the Oxygen-related entities, CC-1 brought numerous deposit accounts to The Park Avenue Bank, and submitted, or caused to be submitted applications for numerous loans from the bank.
On more than ten occasions in 2008 and 2009, ANTONUCCI used CC-1’s private plane to fly for free to, among other places, Florida, Panama, Arizona (so that ANTONUCCI could attend the Super Bowl), and Augusta, Georgia (so that ANTONUCCI could attend the Masters golf tournament). All the while, ANTONUCCI approved over $8 million in overdrafts for the Oxygen-related entities’ various accounts at The Park Avenue Bank. On one occasion in 2009, when a check issued by an Oxygen-related entity bounced,CC-1 communicated to ANTONUCCI that he would not be allowed to use CC-1’s private plane.
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