Two ex-Wilmington Trust executives indicted in bank fraud case

DOVER — Two former top executives of Wilmington Trust were indicted by a federal grand jury Wednesday on charges of making false statements to government officials about the troubled loan portfolio that led to the bank’s demise.

William B. North, 55, the bank’s former chief credit officer, and Kevyn Rakowski, 61, who served as controller, are charged with one count of making false statements to the Securities and Exchange Commission and three counts of making false statements to the Federal Reserve.

Prosecutors say the charges stem from North’s and Rakowski’s involvement in concealing the amount of past due loans on the bank’s books during October and November 2009.

North and Rakowski are the highest-ranking former Wilmington Trust officials to be indicted so far in an ongoing federal investigation into lending practices at the bank prior to its failure and hasty acquisition by M&T Bank Corp. in 2011.

The investigation has led to indictments against several Delaware bank executives and real estate developers, and guilty pleas from three other former Wilmington Trust employees.

Shareholders also have challenged the conduct of banks officials in a class-action lawsuit in federal court.

“This indictment represents another significant step forward in holding accountable those individuals whose criminal conduct contributed to the decline of Wilmington Trust,” said U.S. Attorney Charles Oberly III.

North, of Bryn Mawr, Pennsylvania, and Rakowski, of Lakewood Ranch, Florida, are scheduled to make their initial court appearances on May 21. Their attorneys deny the allegations in the indictment.

“We’ll challenge these charges vigorously until the end,” said David Wilks, an attorney for North.

Authorities say Wilmington Trust was required to report in its quarterly filings the quantity of its loans for which payment was past due for 90 days or more, but that the two defendants helped conceal the truth about Wilmington Trust’s loan portfolio from the investing public and bank regulators.

Authorities allege that North approved the exclusion or “waiver” of past due loans from internal reports he knew would be used to generate the bank’s external financial reports. Rakowski approved the bank’s filings with the SEC and the Federal Reserve knowing that those reports did not include past due loans that had been “waived,” according to the indictment.

David Wilks, an attorney for North, said North has been completely open and cooperative with federal authorities, and that the indictment was “terribly unfair.”

Wilks said North had no knowledge of any criminal activity and that he had no public reporting duties regarding the bank’s loan portfolio. Wilks also said the waiving of past due loans from the reporting list had been a practice at Wilmington Trust for years, although North did not consider it as the best administrative practice.

“He was working to rectify problems that other people have admitted committing,” Wilks said.

Henry Klingeman, an attorney for Rakowski, described her as “a conscientious and capable official at Wilmington Trust.”

“Contrary to the allegations, she and other colleagues acted in good faith as they tried to help the bank through difficulties precipitated by the 2008 financial crisis, among other challenges,” Klingeman said in an email.

Facebook Comment