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Fraud Friday– Park Avenue Bank Director Charged With $1.4 Million Bank Fraud

November 22, 2019

By Caity Witucki
Contributing Editor, Fraud Friday

Fraud Friday– Park Avenue Bank Director Charged With $1.4 Million Bank Fraud

Former director of Park Avenue Bank, Mendel Zilberberg, was recently charged with $1.4 million dollars worth of bank fraud. If found guilty, Zilberberg could be facing over 35 years in prison and will owe millions in fines and restitution.

According to allegations contained in the Indictment, a man named Aron Fried approached Park Avenue Bank about getting a business loan for a home health care business in 2009. However, Fried knew that his business partner had a criminal record and was not credit-worthy. Determined to obtain the loan, Fried and his business partner conspired with Zilberberg.

Fried and his business partner allegedly recruited a straw borrower for the loan application. Zilberberg then used his position as a bank director to personally shepherd the fraudulent loan through the Bank’s approval process and guard it from scrutiny. Together, the co-conspirators contrived a false premise for the loan, supported the loan application with false representations, and set up pass-through bank accounts to funnel the proceeds of the fraudulent loan to themselves.

Based on the alleged false representations made to Park Avenue Bank and Zilberberg’s involvement in the loan approval process, the Bank issued a $1.4 million loan to the Straw Borrower, which was quickly disbursed to the defendants through multiple bank accounts and transfers. In total, the indictment claims Zilberberg received approximately $466,000 of the loan proceeds, Fried received approximately $434,000 of the loan proceeds, and Fried’s partner received the remainder of the loan proceeds.

The loan ultimately defaulted, resulting in a loss of over $1 million. As a result, Park Avenue Bank was closed in 2010 by the New York State Banking Department.

Zillerberg and Fried have not yet been sentenced, and the defendants are presumed innocent unless and until proven guilty.

Sources:
Indictment
Department of Justice

Note:
The entirety of the text of the Indictment and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

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