Fraud Friday — Four Wilmington Trust Bankers Fraud Trial Begins

March 16, 2018

By Bob Coleman
Editor, Fraud Friday

Fraud Friday — Four Wilmington Trust Bankers Fraud Trial Begins

Former bank president Robert V.A. Harra Jr., along with former chief financial officer David Gibson, former chief credit officer William North, and former controller Kevyn Rakowski, are charged with fraud, conspiracy and making false statements to federal regulators.

Prosecutors allege that Wilmington Trust concealed the quantity of past due loans on its books from October 2009 through November 2010. Specifically, authorities say Wilmington Trust failed to disclose to regulators its practice of “waiving” matured loans designated as current for interest and in the process of being extended from the reporting requirements for past due loans.
In the fourth quarter of 2009, for example, Wilmington Trust officials reported that only $10.8 million in commercial loans were 90 days or more past due, concealing more than $316 million in past due loans subject to the waiver practice, Wolf said.

“The evidence will show that these people didn’t lie,” Harra’s defense attorney, Michael Kelly, told jurors. “The evidence will show that this is a dispute about reporting.”

Three other former Wilmington Trust officers, vice president Joseph Terranova, Delaware Market Officer Brian Bailey, and loan officer Peter Hayes have pleaded guilty in the case and are awaiting sentencing. Bailey and Terranova are expected to testify for the prosecution at the trial of their former colleagues.

Charles M. Oberly III – United States Attorney says about Brian Bailey’s sentencing back in 2014, “ . . . take another step forward in bringing to justice those individuals whose criminal conduct participated in and contributed to the failure of the Wilmington Trust Company.

“Mr. Bailey’s participation in both conspiracies showed a violation of both the public trust and an abuse of power. Mr. Bailey’s over-arching criminal conduct in approving improper supplemental financing for the failing Wilmington Trust’s borrowers contributed substantially to the bank’s demise. His conduct, and that of others, enabled the bank to falsely report its level of non-performing loans to Federal Regulators and the public by hundreds of millions of dollars, as you heard today in the courtroom.”

Two other co-conspirators already have been sentenced. James Ladio, former CEO of MidCoast Community Bank, was sentenced to two years in prison and ordered to pay $700,000 restitution. Businessman Salvatore Leone was sentenced to a year and a day in prison and ordered to pay $784,000.

Read our previous reporting

Charges Against More Wilmington Trust Officers, May 8, 2015

James Ladio Gets Two Years, November 28, 2014

Former Midcoast Community Bank CEO Says Debt Drove him to Fraud, November 24, 2018

Community Banker Guilty of Extend and Pretend or Delay and Pray Loans, August 8, 2014

Another Wilmington Trust Bank Indicted, July 14, 2014