TARP Fraud Involving Bank President Uncovered

An ex- president of a private New York based bank has achieved the dubious distinction of being the first person to be charged with misappropriation of TARP funds. Charles Antonucci, president of Park Avenue Bank between June 2004 and October 2009, was arrested earlier this week, accused of stealing US Government funds.

The fraud is said to have taken place when the bank applied for TARP funds. In November 2008, Park Avenue Bank filed an application for a $12 million bailout from funds available under the TARP program, which was intended to support banks struggling to stay afloat because of the financial crisis. However, the bank chairman Donald Glascoff later made a statement in March 2009 saying that the bank would withdraw the application following concerns about restrictions on institutions that use bailout money.

Antonucci allegedly made several false claims to qualify for $11.2 million from the Troubled Asset Relief Program. He misled the bank and FDIC regulators that he had invested $6.5 million of his personal money in the bank. This was supposed to show that the bank would be able to sustain if it was given some financial assistance. But it was later found that no such investment was made by him. If found guilty, Antonucci could face a term of up to 30 years in prison.

Speaking about the fraud, Preet Bharara, a Manhattan U.S. Attorney, said that Antonucci was the first to be caught for such a fraud, but there could be many others who have gone undetected so far. Park Avenue Bank has been closed and customer funds have been moved to Valley National Bank. Regulators also stated that the bank was improperly managed and undercapitalized to such an extent that operations were not sustainable in the long run.

The former president has been charged with bribery, fraud, misappropriation of funds, and self dealing adversely affecting the New York state banking department, U.S. Federal Deposit Insurance Corporation (FDIC) and TARP.

The news has come just days after a report accused Lehman Brothers’ top management of accounting fraud. The two cases show the rampant cynicism and deceit that is now deeply embedded in the financial sector. There is no surprise then that most people favor strong financial reform to improve the state of affairs in the industry. However, lawmakers would have to overcome stiff resistance from the financial lobby to enact any legislation that goes far enough to be effective.

Speak Your Mind