Wilmington Trust reaches settlement in federal fraud case

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Wilmington Trust has reached a $60 million settlement with the U.S. Attorney’s office for its alleged role of hiding the amount of past due loans on the bank’s books.

The settlement includes $16 million previously paid to the Securities and Exchange Commission in a related action.

The agreement was announced as a trial for four of its executives charged with bank fraud was set to begin. The individual cases will continue, but District Court Judge Richard Andrews delayed the trial until March.

Acting U.S. Attorney David Weiss said he believes the settlement will provide relief to victims, and prevent further loss down the road.

“We believe the settlement accomplishes three important objectives—first, there’s a substantial payment for the victims, those who suffer losses, the employees who suffered losses as a result of what transpired, Wilmington Trust has accepted responsibility for its actions, and if possible, we wanted to avoid collateral consequences of a criminal conviction of the bank, which could have resulted in further loss of jobs and revenues to state of Delaware,” Weiss said.

Weiss would not comment on the individual cases of Robert V.A. Harra, 66, and David Gibson, 58, both of Wilmington, William North, 55, of Bryn Mawr, Pa. and Kevyn Rakowski, 61, of Lakewood Ranch, Fla.

Weiss said the prosecution team would prefer to move forward with the trial, and also said the delay allows the defense to strengthen its case. However, he said he doesn’t regret moving forward with the settlement.

“We felt the entity had to be held accountable, we believe we’ve done that by virtue of the resolution, we also felt it was important to hold individual officers and executives accountable and we continue to pursue that,” Weiss said.

A 2015 indictment accused the four executives of allegedly concealing the amount of past due loans on the bank’s books from the Federal Reserve, the Securities and Exchange Commission and the public between October 2009 and November 2010.

(image via Google Maps)

The nineteen-count superseding indictment charged the defendants with making false statements in securities filings and to agencies of the U.S. government.

All defendants are charged with conspiracy to defraud the U.S., to commit fraud in connection with the purchase and sale of securities and making false statements to regulators.

They also 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 U.S. government and two counts of making false statements in SEC reports.

Settlement money is intended to go to shareholders, investors and employees who were invested in the company and sustained losses.

The bank does not admit any liability in the settlement of charges.

A statement released by Wilmington Trust’s new owners M&T Bank read; “Wilmington Trust believes resolving this matter now is in the best interest of the company.”

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