Three Charged in What U.S. Calls $100 Million Schemes
Prosecutors charged three men with taking part in a $100 million fraud involving the former chief executive officer of Manhattan’s Park Avenue Bank who pleaded guilty in 2010 to lying to regulators and embezzling funds.
Wilbur Anthony Huff, a Kentucky businessman; Park Avenue Bank senior vice president Matthew L. Morris; and Allen Reichman, formerly an executive at Oppenheimer & Co. Inc., (OPY) were indicted by a federal grand jury in Manhattan and accused of roles in a group of inter-related schemes, including defrauding Oklahoma regulators in the $37.5 million sale of an insurer that was later forced into receivership.
The schemes were allegedly conducted with the help of former Park Avenue Bank CEO Charles Antonucci, the first person convicted of trying to defraud the U.S. Troubled Asset Relief Program. Regulators closed Park Avenue Bank in March 2010 and its assets were assumed by Wayne, New Jersey-based Valley National Bank, according to the Federal Deposit Insurance Corp.
Huff, 51, of Louisville, Kentucky, engaged in fraud and bribery through several businesses throughout the U.S., including temporary staffing firm General Employment Enterprises Inc. (JOB), insurance broker U.S. Insurance Group and payroll management firm O2HR LLC, prosecutors said. Huff allegedly bribed bankers including Antonucci and Morris, to help him carry out his schemes, according to the indictment.
The Kentucky businessman “unlawfully took and received tens of millions of dollars from clients, active businesses and financial institutions, and used these funds to benefit himself, his family and other companies and accounts in which he had interests and obligations,” prosecutors said in the indictment.
“Integral to the success of these fraudulent schemes was Huff’s corrupt relationship with Park Avenue Bank executives Matthew L. Morris, the defendant, and Antonucci,” they said.
Huff is also accused of causing O2HR, a business services firm, to fail to pay $53 million in employment taxes. The most serious charge against Huff, conspiracy to commit bank fraud, carries a 30-year prison term, prosecutors said.
The 13-count indictment also accuses Huff and Morris, 37, of Queens, New York, of conspiracy to commit bank bribery, prosecutors in the office of Manhattan U.S. Attorney Preet Bharara said today in a statement. Reichman, 52, of Irvington, New York, was charged for his alleged role in the insurance- fraud scheme, according to the statement.
All three men were arrested today, prosecutors said.
David Lambertus, a lawyer for Huff; Alan Nelson, an attorney for Reichman; and Randy Zelin, who is representing Morris, didn’t immediately return calls seeking comment on the charges. Brian Maddox, a spokesman for Oppenheimer, also didn’t immediately return a call.
Prosecutors alleged Huff carried out his schemes from about 2007 through 2010, while maintaining as many as 22 accounts at Park Avenue Bank through which he controlled the finances of his various business entities.
Huff paid Antonucci and Morris hundreds of thousands of dollars in bribes in exchange for favors including the issuance of fraudulent letters of credit, which allowed Huff to accrue more than $9 million in overdrafts, and the issuance of fraudulent loans to the company, according to the indictment.
Those three men as well as Reichman were also involved in a related conspiracy to defraud Oklahoma insurance regulators by misrepresenting the source of $37.5 million which Antonucci used to purchase insurer Providence Property & Casualty Insurance Co. from one of Huff’s companies, according to the filing.
Reichman helped arrange an illegal $30 million loan from Oppenheimer to fund the bulk of the deal, which wasn’t disclosed to the regulators, according to the indictment.
Prosecutors additionally alleged that Huff and Morris helped Antonucci with a so-called round-trip transaction, in which the former bank chief executive falsely represented to U.S. regulators that he had invested $6.5 million of his own money in the bank.
Antonucci used the transaction to attempt to obtain $11 million from TARP, according to the government.
“Today’s indictment charging two of Antonucci’s alleged co-conspirators represents ‘Part Two’ in our ongoing investigation into the misconduct at the bank that ultimately led to its collapse,” Bharara said in a statement.
The case is U.S. v. Huff, 12-cr-00750, U.S. District Court, Southern District of New York (Manhattan).
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