A former Wilmington Trust manager has been charged with several offenses related to commercial real estate loans. Wilmington Trust was sold to M&T following large loan losses.
Peter W. Hayes, 48 of Newark, was charged in a seven-count Indictment with offenses that each carry up to 30 years in prison. A News Journal story reported Hayes pleaded not guilty to the charges this week in federal court.
He is the latest in a number of former Wilmington Trust managers and executives to indicted on loan fraud charges. Two higher ranking Wilmington Trust executives have pleaded guilty to charges of concealing massive loan losses that are blamed for the sale of the once venerated financial institution to Buffalo-based M&T. This week Brian Bailey, who supervised lending in Delaware, pleaded guilty and in a court appearance said others were involved in concealing losses.
The investigation remains ongoing. It also involves investigators seeking violations related to TARP, a program that invested in Wilmington Trust and other banks during the 2009 financial crisis that threatened the nation’s banking system.
The indictment charges that Hayes, a former relationship manager in the Delaware Commercial Real Estate Division at the Wilmington Trust Co. engaged in several fraudulent transactions with one of his customers, identified in the Indictment as “Customer A.” According to the indictment, Hayes engaged in a scheme that included buying homes and getting rental income, according to court filings.
The customer A has been identified by the News Journal as Stephen Anderson of Anderson Homes.
– Hayes accepted and solicited from Customer A investment opportunities in Customer A’s real estate developments, in which Hayes received monthly rental income sufficient to pay his mortgage plus expenses on investment properties purchased from Customer A;
– Hayes later solicited and accepted a favorable loan from Customer A to pay off Hayes’ investment losses;
– Hayes knowingly causing WTC loan funds to be disbursed to Customer A for purposes that were not authorized by WTC’s loan agreements with Customer A, and submitted false information in support of draw requests to provide funding to Customer A, including to cover overdrafts in Customer A’s operating bank account; and
– Hayes caused WTC to lend funds without loan committee approval to an investment company founded by Customer A’s President, so that the investment company could purchase model homes that would be leased back to Customer A or others.
“The indictment alleges that the defendant, a former Wilmington Trust lender, engaged in multiple fraudulent schemes to benefit one of Wilmington Trust’s largest clients, as well as himself,” stated United States Attorney Oberly. “The client ultimately suffered millions of dollars in losses, which were shouldered by the bank and its shareholders. Our office will continue to vigorously investigate alleged fraudulent schemes, such as those charged in today’s Indictment, related to the downfall of Wilmington Trust.”
The case was investigated by the Federal Bureau of Investigation and the Special Inspector General for the Troubled Asset Relief Program.
