Bank Execs Indicted For Allegedly “Hiding” Bad Loans
Two former executives of Wilmington Trust Corp. have been indicted for making false statements to the government in connection with the bank’s handling of bad loans during the economic crisis.
William North, the former chief credit officer, and Kevyn Rakowski, the former controller, are accused of hiding the extent of bad loans on the Wilmington Trust books in October and November of 2009. They were each charged with one count of making false statements to the Securities and Exchange Commission, and three counts of making false statements to the Federal Reserve.
Wilmington Trust agreed to be sold to M&T Bank in 2010 at a deep discount, leaving some shareholders feeling betrayed and seeking justice. The bank paid $18.5 million in September 2014 to settle related fraud charges.
“Bankers across our nation faced rising past due loans during the financial crisis, but not all made a choice to hide the bad loans from shareholders and regulators like these two former Wilmington Trust officers are alleged to have done,” said Christy Romero, special inspector general for TARP said in statement.
United States Attorney for the District of Delaware Charles M. Oberly called the indictment “another significant step forward in holding accountable those individuals whose criminal conduct contributed to the decline of Wilmington Trust.”
SEC Files Fraud Charges Against Four Execs
Meanwhile, the Securities and Exchange Commission filed fraud charges against then-CFO David Gibson, COO and President Robert Harra Jr. as well as North and Rakowski. The SEC claims that they “took part in a scheme to mask the impact of real estate market declines on the bank’s portfolio of commercial real estate loans,” excluding hundreds of millions in past due loans from its financial reports.
Attorneys for Harra, North and Rakowski who spoke to the News Journal said their clients have been cooperating with government officials and have been acting in good faith. The News Journal couldn’t reach a lawyer for Gibson.
The indictment and SEC complaint are embedded below: