The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and Charles M. Oberly III, United States Attorney for the District of Delaware, have announced that Michael A. Zimmerman of Dover, Del., was indicted by a federal grand jury on Jan. 23, 2013 for numerous bank fraud-related offenses. More specifically, Mr. Zimmerman was charged with one count of conspiracy to commit bank fraud and seven counts of making a false statement to a financial institution, each punishable by a maximum term of 30 years imprisonment and a fine of $1 million. The indictment also charges Zimmerman with one count of money laundering in violation of Title 18, United States Code, § 1957. This charge carries a maximum term of 10 years imprisonment and a fine of $250,000.
Zimmerman, a Delaware developer, obtained financing in excess of $37 million from the Wilmington Trust Company in connection with three development projects—Salt Pond Plaza, Compass Pointe, and the Shoppes at Fieldstone. In March 2011, prior to its acquisition by M&T Bank, Wilmington Trust sold the debt associated with these, as well as other projects in which Zimmerman was a buyer, to a third party. Wilmington Trust incurred a loss on these three projects alone in excess of $26 million.
The Indictment alleges that in 2007 and 2008, in connection with the Salt Pond Plaza, Compass Pointe and Shoppes at Fieldstone projects, Zimmerman and uncharged co conspirators submitted false draw requests for payment from the bank and requested and received advanced funds in violation of the terms of the loan agreements with Wilmington Trust. Wilmington Trust funded the draw requests, which were not utilized for the purposes that Zimmerman and his co-conspirators had represented. In one instance, Zimmerman requested and received $150,000 in funds from Wilmington Trust that he represented to be for architectural and engineering costs, but instead used the money to finance acquisition of a personal interest in a development in the Bahamas.
"Zimmerman's alleged large scale fraud against a TARP bank included diverting construction loans for unauthorized purposes, such as for a project in the Bahamas," said Christy Romero, Special Inspector General for TARP (SIGTARP). "Defrauding a TARP bank is the same as defrauding American taxpayers who funded the bailout, and SIGTARP and our law enforcement partners will bring to justice those responsible for crimes related to TARP," United States Attorney Oberly said, adding "The Indictment reflects this Office's commitment to hold accountable those who criminally contributed to the failure of the Wilmington Trust Company. The shareholders and employees of the bank, as well as the community, have been harmed by this failure and the government remains firmly committed to prosecuting those whose fraudulent acts compromised the soundness and viability of a Delaware institution. The investigation continues."