The trial of former Wilmington Trust executives gets underway this week.
In 2015, Former Wilmington Trust President, Robert V.A. Harra and other executives have been indictedon federal charges related to concealing information on bad loans that eventually led to the sale of the landmark financial institution.
Click on the link below for a copy of the indictment.
Harra of Wilmington; David Gibson of Wilmington, William North of Bryn Mawr, PA, and Kevyn Rakowski, 61, of Lakewood Ranch, FL were indicted for their alleged roles in concealing from the Federal Reserve, the Securities and Exchange Commission (SEC) and investors. All have claimed their innocence.
The case involves, the “total quantity of past due loans on Wilmington Trust’s books from October 2009 until November 2010, prosecutors stated.
The trial has been delayed as lawyers continued to seek a dismissal and made other filings.
Other cases involving Wilmington Trust have been reported that involved lower level personnel and area banks.
All defendants are charged with conspiracy to defraud the United States, to commit fraud in connection with the purchase and sale of securities, and making false statements to regulators.
The federal government is involved, in part, because of the TARP program launched during the financial downturn. The program made direct investments in banks as a way to shore up the nation’s financial system after the subprime mortgage meltdown of 2008 and subsequent recession.
All defendants are charged with one count of false statements in connection with the purchase or sale of securities, four counts of making false entries in banking records, seven counts of making false statements to agencies of the United States government and two counts of making false statements in SEC reports.
Harra and Gibson are also charged with two additional counts of making false statements in SEC reports and Gibson is charged with three counts of falsely certifying financial reports.
North and Rakowski were previously charged with two counts of making false statements to an agency of the United States, relating to the concealment from the market and the Federal Reserve the total quantity of past due loans on the bank’s books during the months of October and November 2009.
As the bank’s President and Head of Regional Banking, Harra allegedly encouraged the “waiver” of past due loans. He served as a primary point of contact with the bank’s regulators during 2009 and 2010, signed bank regulatory filings, participated in quarterly earnings calls with investors, and did not disclose the bank’s failure to report “waived” loans, prosecutors alleged.
As Chief Financial Officer, Gibson, also knew the bank had “waived” loans from public reporting and failed to disclose this. Despite this knowledge, Gibson helped to draft and approved SEC filings and certified that those same filings fairly presented the financial condition of Wilmington Trust.
Rakowski, as Controller, approved the bank’s filings with the SEC and the Federal Reserve knowing that those reports did not include past due loans that had been “waived.”
In November 2010, Wilmington Trust was acquired by M&T, Buffalo, NY, at a discount of approximately 46 percent from the bank’s share price the prior trading day. Hundreds of jobs were eliminated as M&T worked to resolve problem loans and injected capital.
M&T has retained the Wilmington name for the trust side of the business.