February 23, 2015
Park Avenue Bank closed in 2010 after receiving $11 million in TARP funds.
Its president, Charles Antonucci was the first defendant convicted on TARP fraud charges in 2010.
A former senior vice president pled guilty in 2013. And last December another defendant pled guilty.
Add Allen Reichman to the list.
From July 2008 to November 2009, Huff, Morris, Reichman, and Antonucci conspired to defraud Oklahoma insurance regulators into allowing Antonucci to purchase the assets of Providence P&C—the Oklahoma insurance company that was owed $5 million by O2HR. Specifically, Huff and Antonucci devised a scheme in which Antonucci would purchase Providence P&C’s assets by obtaining a $30 million loan from an investment bank and financial services company headquartered in New York, New York, and by promising Providence P&C’s own assets as collateral for the loan.
However, because Oklahoma insurance regulators had to approve any sale of Providence P&C, and, because Oklahoma law forbade the use of Providence P&C’s assets as collateral for such a loan, Huff, Morris, Antonucci, and Reichman made, and conspired to make, a number of material misstatements and material omissions concerning the true nature of the financing for Antonucci’s purchase of Providence P&C. Among other things, Reichman directed Antonucci to sign a letter that provided false information regarding the collateral that would be used for the loan, and Huff, Morris, and Antonucci conspired to falsely represent to Oklahoma insurance regulators that Park Avenue Bank—not the investment firm—was funding the purchase of Providence P&C.
After deceiving Oklahoma regulators into approving the sale of Providence P&C, Huff, Morris, and Antonucci took millions of dollars of the company’s assets for themselves. Among other things, Morris and Antonucci each received $500,000; Morris received another $170,000 for serving as an executive at the company; and Huff took $4 million, which he used to continue the scheme to defraud O2HR’s clients.
Reichman received hundreds of thousands of dollars in commissions as a result of the investment firm’s loan—a loan that Reichman had been repeatedly warned not to extend because it was illegal. Ultimately, in November 2009, the insurance company became insolvent and was placed in receivership after Huff, Morris, and Antonucci had pilfered its remaining assets.
Reichman faces five years in jail.