The U.S. District Attorney for Delaware expressed disappointment over the decision by the U.S. Court of Appeals in Philadelphia to overturn the convictions of four former executives of Wilmington Trust.
An attorney representing defendants that included the bank’s president praised the decision.
The four were charged with lying to the Federal Reserve, the Securities and Exchange Commission, and the public regarding millions of dollars in bad loans. The bad loans led to the collapse of Wilmington Trust, which was acquired by M&T for $300 million, a fraction of its stock market value a few days earlier.
“In a matter of first impression, the court held that the government was required to establish that the defendants’ statements were false under any ‘objectively reasonable’ interpretation of the applicable reporting instructions – even in a circumstance where a defendant never believed in that interpretation and intended to lie to the regulators all along,” U.S. District Attorney David Weiss stated.
Weiss concluded, “Needless to say, I am disappointed with this result. We are currently analyzing the court’s opinion and evaluating our options, including, as the Court of Appeals authorized, retrying the defendants for conspiracy and securities fraud.After the guilty verdict in this case, I described the prosecutors and agents who worked on this case as being among the finest professionals in law enforcement. I stand by that statement today.”
Michael Kelly, a partner with McCarter & English in Wilmington and counsel for the four, offered the following:
“My client and our team are obviously very happy, and incredibly relieved, that the Third Circuit panel unanimously agreed that these convictions were wholly unfair and unjust. I never understood why this case was brought. The federal Banking regulator overseeing Wilmington Trust admitted at trial that the bank notified the Fed Reserve several times, in writing, how the bank was reporting these loans. The bank’s auditor, KPMG, also admitted the same during trial. So, how could there be any “fraud” committed with respect to reporting? And one of the bank’s three federal regulators, the OTS, had a public guidance document directly on point that agreed with the bank’s reporting practices. Despite the fact that this evidence should have led to an acquittal,the government vociferously objected to it and succeeded in greatly limiting its application..”
Kelly continued, “These “past due” loans comprised less than three percent of the bank’s loan portfolio. Yet, the government made its entire case about all of the bank’s other problems. It was thus easy for the jurors to dislike anyone connected to the bank.
Kelly concluded, “Rob Harra is the most decent human being I have ever met. He never dreamt of breaking the law. And there was no evidence whatsoever that anyone even hinted to Rob that the bank’s reporting of these loans, which was unchanged for 20 years, was illegal or even improper. By the way, during the period of the alleged “Conspiracy” the other three defendants did not report to Rob Harra; rather, they reported to Rob’s boss and the bank’s Chairman, Ted Cecala.”
Cecala has never faced any civil or criminal charges.
See earlier story below: