Ex-NY bank president first accused of TARP fraud

Grant McCool
NEW YORK
Mon Mar 15, 2010 5:34pm EDT

NEW YORK (Reuters) - The former president of New York's privately held Park Avenue Bank was arrested and charged on Monday with being the first person to attempt to steal from U.S. government bailout funds in the financial crisis.

A 10-count criminal complaint accused Charles Antonucci of devising "an elaborate round-trip loan transaction" that he told others was his own $6.5 million investment in the bank, misleading state bank regulators and the U.S. Federal Deposit Insurance Corporation (FDIC).

The charges filed in Manhattan federal court said Charles Antonucci made false statements in the bank's application for $11.2 million from TARP, the Troubled Asset Relief Program.

"Antonucci is the first person ever to be charged with attempting to defraud the TARP and we expect he will not be the last," Manhattan U.S. Attorney Preet Bharara said at a news conference.

He declined to give further details of the continuing investigation, other than to say prosecutors and New York state bank regulators would be making a review of banks that appear to be having problems.

The prosecutor said Antonucci's "supposed investment was the functional equivalent of monopoly money." Bharara described additional components of a complex fraud, including a line of credit through a company called "Easy Wealth;" overdrafts to companies controlled by an unidentified co-conspirator; leases on personal property paid by the bank; a counterfeit certificate of deposit; and a $100,000 defrauding of the pastors of a church in Coral Springs, Florida.

On Friday, state regulators closed Park Avenue Bank, which had assets of $520.1 million and deposits of $494.5 million at the end of 2009, according to the FDIC. Customer money was transferred to another bank, Valley National Bank, officials said. Valley National Bank is part of Valley National Bancorp of Wayne, NJ.

The regulators determined Park Avenue Bank was badly managed and "critically undercapitalized," according to a statement on Friday by the New York State Banking Superintendent.

Antonucci, 59, was president of the bank from June 2004 to October 2009 and the alleged offenses occurred between October 2008 and February 2009, according to the court document.

Neil Barofsky, the special inspector general of TARP, told the news conference that Antonucci "launched a criminal enterprise" as soon as the U.S. Treasury announced its historic program to bail out the banks in late 2008.

"The charges today send a powerful message to those who tried to steal from the TARP, those who have stolen from the TARP and those who are contemplating similar fraudulent action ... You will be tracked down; you will be caught; you will be arrested; and you will be brought to justice," Barofsky said.

Investigators from U.S. Immigration and Customs Enforcement (ICE) received the first tip in Ecuador that someone there was interested in making an illegal business deal with Antonucci, ICE special-agent-in-charge James Hayes told reporters.

The criminal complaint said that "while the bank's TARP application was under review by the FDIC, Charles Antonucci encouraged and caused other individuals acting on behalf of the bank to encourage the FDIC to grant the bank's TARP application, in part on the basis of Antonucci's purported personal investment of $6.5 million in new capital." Antonucci and others "repeatedly singled out Antonucci's $6.5 million capital investment as evidence that the bank was viable and deserving of TARP funds."

Instead, the complaint said, the investment "was a sham, round-trip transaction using the bank's own funds and was designed, at least in part, to deceive regulators about the bank's capital position."

The charges include self-dealing, bank bribery, embezzlement and fraud on the New York state banking department, U.S. Federal Deposit Insurance Corp and TARP. Antonucci was arrested on Monday morning at his home in Fishkill, New York.

Antonucci appeared in Manhattan federal court and was released on $2 million bond. He did not enter a plea but his lawyer said he would plead not guilty.

If convicted, he would face up to 30 years in prison on some of the charges. "These charges are what they are -- charges," Antonucci's lawyer, Charles Stillman, told reporters.

The bank in November 2008 applied for a bailout of less than $12 million under the TARP program, but withdrew its application over concerns about restrictions on banks that receive taxpayer money, bank chairman Donald Glascoff said on March 10, 2009.

(Reporting by Grant McCool, additional reporting by Edith Honan; editing by Gerald E. McCormick, Robert MacMillan and Andre Grenon)

http://www.reuters.com/article/idUSTRE62E2Y520100315