Dover businessman sentenced in Wilmington Trust fraud case

WILMINGTON — Dover businessman Salvatore Leone was sentenced Tuesday to a year and a day in federal prison after pleading guilty to conspiracy in an ongoing criminal investigation of the lending practices of the failed Wilmington Trust bank.

Leone, 52, apologized for the pain and embarrassment he inflicted on his family through his “stupidity and poor judgment.”

Judge Gregory Sleet sentenced Leone after hearing emotional testimony from two of his siblings, who described him as a loving, generous individual, the center of their close-knit family, and a critical caregiver for his 10-year-old autistic son.

“I am baffled by your behavior, completely flummoxed,” said Sleet, noting Leone’s status as a community leader and philanthropist, his upbringing, and his success as a businessman. “… It’s my very difficult job to respond to what you’ve done.”

Sleet gave Leone 60 days to report to prison so that he can make business and personal arrangements, particularly for the care of his son.

“I’m sure that this family is going to step up and do that. I have no doubt about it,” said Sleet, who rejected a defense request for home confinement and electronic monitoring so that the care routine for Leone’s son would not be disturbed.

Leone faced up to 30 years in prison and a $1 million fine, but prosecutors sought a departure from sentencing guidelines because of his “significant” cooperation, asking for a sentence of 13 months. Leone must pay more than $784,000 in restitution and perform 200 hours of community service but will not have to pay a fine.

Leone, son-in-law of Dover city councilman and former mayor and police chief James Hutchison, declined to comment as he and family members left the courtroom.

Leone was a business partner of Michael Zimmerman, a prominent Dover developer who died in January while awaiting trial on charges of conspiracy and money laundering, and making false statements to a financial institution.

The investigation has led to several other arrests and guilty pleas, including the August indictments of former Wilmington Trust president Robert Harra Jr. and three of his top executives.

Prosecutors alleged that, from 2007 through 2009, Leone conspired with Zimmerman to submit fraudulent requests to Wilmington Trust to draw on construction loans, then used the money for unrelated purposes, including their personal use.

“It was not a singular lapse in judgment,” prosecutor Leslie Wolf said of Leone’s criminal behavior, adding that sentencing him to confinement in his 5,000-square-foot house with swimming pool and waterfront view would send the message “that crime pays.”

Prosecutors have said Zimmerman and his associates obtained loans from Wilmington Trust totaling more than $36 million for three development projects, and that the bank incurred a loss of more than $26 million when it sold the related debt in 2011.

In addition to the criminal investigation, former Wilmington Trust officials are defendants in a civil fraud complaint filed by the Securities and Exchange Commission, and in a federal class action lawsuit by former shareholders. The shareholder lawsuit alleges that senior officers and executives portrayed the bank as a conservative lender focused on mitigating credit risk but in fact played fast and loose with the company’s real estate loan portfolio, perpetrating a fraud that led to the demise of the 107-year-old bank.

M&T Bank Corp. acquired Wilmington Trust at a fire sale price in 2011, resulting in more than 700 layoffs in Delaware. The sale came after Wilmington Trust posted a quarterly loss of about $370 million because of bad real estate construction loans and said future losses also were likely.

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