Ex-Wilmington Trust Loan Officer Accused of Bank FraudPhil Milford and Laura Marcinek
A former Wilmington Trust Corp. executive admitted to helping extend $373 million in loans that weren’t reported as past due, contributing to the bank’s collapse.
Joseph Terranova, 45, the ex-vice president of the bank’s commercial real estate division, pleaded guilty today to conspiracy to commit criminal bank fraud in connection with unauthorized loans.
U.S. District Judge Gregory M. Sleet asked Terranova at a hearing in Wilmington if he understood the penalties he might face, including as long as five years in prison.
“Yes sir, I do,” Terranova answered.
The plea “is an important step in holding responsible those individuals whose criminal conduct contributed to the failure of Wilmington Trust,” Delaware U.S. Attorney Charles M. Oberly III said in a statement after the hearing.
Wilmington Trust, founded by the du Pont family and once Delaware’s largest bank, was a recipient of bailout money from the U.S. Troubled Asset Relief Program. It was bought in May 2011 by Buffalo, New York-based M&T Bank Corp.
“As a senior bank official at TARP-recipient Wilmington Trust, Terranova concealed the bank’s true financial condition by engaging in ‘extend and pretend’ schemes to keep loans current and to hide past-due loans from regulators and investors,” TARP special inspector Christy Romero said in the statement.
The plea agreement details how Terranova conspired to extend credit to customers under terms “that would not have been approved” by the loan committee -- including $12 million in loans between 2007 and 2009 to Dover, Delaware, real estate developer Michael Zimmerman.
The developer at one point sent a fax to Terranova asking him to “send $1 million ASAP I have to pay my bar tab,” when allegedly, Terranova “was aware that Zimmerman was not entitled to such funds” under the contract, according to Oberly’s charge sheet.
M&T, led by Chief Executive Officer Robert Wilmers, 79, acquired Wilmington Trust for $406 million in stock. The deal added about 55 branches in upstate New York, Pennsylvania and the Mid-Atlantic region, M&T said at the time.
Wilmington Trust had put itself up for sale amid losses fueled by soured commercial real estate loans and investments in pools of trust-preferred securities.
The takeover built M&T’s market share in Delaware and expanded wealth management and corporate services to boost fee income. It also valued Wilmington Trust at about 46 percent less than its closing price at the time of the announcement in November 2010.
Michael Zabel, an M&T spokesman, didn’t immediately respond to messages seeking comment on the plea.
The case is U.S. v. Terranova, 13-cr-00039, U.S. District Court, District of Delaware (Wilmington).