The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) announced that Peter W. Hayes of Newark, Del. has been charged in the District of Delaware in a seven-count indictment with two counts of Fraudulently Benefiting in a Loan Transaction, two counts of Soliciting or Accepting for His Own Benefit Anything of Value in Connection With the Transaction and the Business of a Financial Institution, and three counts of Bank Fraud.
The Indictment alleges that Hayes, a former lender in the Delaware Commercial Real Estate Division at TARP recipient Wilmington Trust Company engaged in several fraudulent transactions with one of his customers, identified in the Indictment as “Customer A.” According to the Indictment, Hayes engaged in the following conduct in his dealings with Customer A:
(1) 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;
(2) Hayes later solicited and accepted a favorable loan from Customer A to pay off Hayes’ investment losses;
(3) Hayes knowingly caused 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
(4) 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.
“Hayes stands charged with bank fraud, bribery, and fraudulently benefiting from loan transactions for a multitude of various offenses,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “This type of fraud and self-dealing is unacceptable, and SIGTARP and our law enforcement partners will pursue any offenders whose conduct jeopardizes taxpayers’ TARP investments to hold perpetrators accountable for their crimes.”
“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," said Charles M. Oberly III, United States Attorney for the District of Delaware. "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 this Indictment, related to the downfall of Wilmington Trust.”
Counts one and two charge the defendant with Fraudulently Benefiting in a Loan Transaction, in violation of Title 18, United States Code, Sections 1005 and two. The maximum penalties for each of Counts one and two are a term of imprisonment of thirty years; a fine of $1 million; a term of supervised release of five years; a $100 special assessment; and mandatory restitution.
Counts three and four charge the defendant with Soliciting or Accepting for His Own Benefit Anything of Value in Connection With the Transaction and the Business of a Financial Institution, in violation of Title 18, United States Code, Sections 215(a)(2) and two. The maximum penalties for each of Counts three and four are a term of imprisonment of 30 years; a fine of $1 million; a term of supervised release of five years; a $100 special assessment; and mandatory restitution.
Counts five through seven charge the defendant with Bank Fraud, in violation of Title 18, United States Code, Sections 1344 and two. The maximum penalties for each of Counts five through seven are a term of imprisonment of 30 years; a fine of $1 million; a term of supervised release of five years; a $100 special assessment; and mandatory restitution.
This case is being investigated by SIGTARP and the Federal Bureau of Investigation, and it is being prosecuted by Assistant United States Attorneys Robert F. Kravetz, Lesley F. Wolf, and Ilana H. Eisenstein of the U.S. Attorney’s Office for the District of Delaware.
