Bank Interim CEO and a Board Member Prohibited from the Banking Industry – Fraud Friday

November 15, 2024

Delaney Sexton
Contributing Editor

Bank Interim CEO and a Board Member Prohibited from the Banking Industry – Fraud Friday

This week, the Federal Reserve Board announced that Anthony R. Gressak III and James T. Chung are prohibited from participating in the banking industry in the future due to fraudulently obtaining COVID loans. Anthony Gressak III was a director and former interim CEO of Nano Financial Holdings, Inc. and Nano Banc. Chung was a director on the bank and company’s board of directors.

Both Gressak and Chung had an outside business interest as partial owners of a group of corporate entities. Throughout the pandemic, the entities received a total of $15.5 million from PPP, EIDL, and the Restaurant Revitalization Fund. It is alleged that the duo made materially false representations in the loan applications. They also used a portion of the loan proceeds for personal expenses.

Since 2018, Gressak has been a shareholder of Allegiant which partially owned Nano Financial Holdings, Inc. After Allegiant was dissolved, Gressak owned shares in Nano directly. He served on the board of directors and as the bank’s CCO from 2018 to 2021, and then he became the bank’s interim CEO.

The Fed issued an enforcement action against Nano in 2021 which is attributed to the relatively high proportion of real estate loans. The agreement required them to give 30 days’ written notice before appointing any new director or senior officer. They failed to notify the Fed when Gressak organized and voted in favor of shareholder action which caused the bank to install a new CEO, Gressak.

Additionally, during a $37 million capital raise, Gressak and other bank founders created a plan to receive a commission on the investments despite the agreement with investors stating bank executives would not be receiving a commission or compensation. Gressak received $194,704.67 in commissions, including $100,000 that was advanced to him two months before the capital was funded. He concealed his commission from the Reserve Bank and Nano’s boards.

Lastly, Gressak approved a $148,000 payroll advance to an executive officer of the bank. This allowed the employee to inflate his income to a lender from which he would obtain a loan.

Anthony Gressak III will also have to pay a fine of $75,000. Both agreed to comply with the orders, but they did not admit or deny the allegations.

Sources:
Banking Dive Article
Anthony R. Gressak III Order of Prohibition
James T. Chung Order of Prohibition