Former chief of Park Avenue Bank charged with TARP fraud
Tuesday, March 16, 2010
NEW YORK -- The former chief executive of a New York bank shut down by regulators last week was arrested Monday for attempting to steal from the taxpayer-funded bailout program, marking the first time criminal charges have been filed in connection with alleged abuse of the government's financial-rescue effort.
According to a 10-count criminal complaint unsealed Monday in federal court in Manhattan, Charles Antonucci Sr., former president and chief executive of privately owned Park Avenue Bank, orchestrated an elaborate scheme to defraud the bank and its regulators.
Investigators said Antonucci tried to fraudulently obtain $11.3 million from the Treasury Department's Troubled Assets Relief Program by lying about the bank's capital levels in its November 2008 application for bailout funds. He told regulators that he had invested $6.5 million of his personal money to boost the bank's capital, the complaint said, even though the investment was made with the bank's own funds through a "series of deceptive, round-trip loan transactions" devised by Antonucci.
"He deliberately and repeatedly deceived regulators," Preet Bharara, U.S. attorney for the Southern District of New York, said in a news conference. "Antonucci is the first person ever to be charged with attempting to defraud the TARP. And we suspect he will not be the last."
The charges in the complaint include embezzlement, bank bribery, wire fraud, bank mail fraud, making a counterfeit certificate of deposit, fraud on the Federal Deposit Insurance Corp. and making false statements on its TARP application. Antonucci, unshaven and wearing a red-hooded sweat shirt, appeared before a U.S. magistrate judge Monday and was released on a personal recognizance bond of $2 million. He did not enter a plea. Antonucci's attorney, Charles Stillman, said that he was studying the charges and declined to comment further.
The complaint says Antonucci schemed to gain control of the bank and convince regulators that it had improved its ability to absorb losses.
In September 2008, regulators downgraded the bank to "undercapitalized," putting it on notice for its deteriorating financial condition. Antonucci then orchestrated a series of transactions to move the bank's money around, with the help of unnamed co-conspirators, to make it appear as if he had invested $6.5 million of his own money in the bank, the complaint said. In return for the investment, Antonucci received bank shares that boosted his ownership from 1.4 percent to a 52 percent majority stake.
Antonucci emphasized the $6.5 million in "new capital" to the FDIC in making a pitch for TARP funds; the FDIC told Antonucci in February 2009 that it would not recommend approval of the application to a multi-agency regulatory committee, the complaint said.
Shortly after, bank representatives, including Antonucci himself, told reporters the bank had withdrawn its application, in part because of added oversight and negative perceptions related to TARP. Antonucci resigned from the bank in October; he was paid about $250,000 a year, prosecutors said.
Bharara declined to give details on investigations into other alleged TARP-related fraud.
"The charges today should send a powerful message to those who have tried to steal from the TARP, those who have stolen from the TARP and those who are contemplating similar fraudulent action," said Neil M. Barofsky, the special inspector general assigned to oversee TARP, who accompanied Bharara at the news conference.