TARP Fraud! An (Alleged) First in the Annals of Crime

This post is a re-print from the Wall Street Journal's Law Blog. The post is the original content of Ashby Jones.

Here’s a story that elicits within us more than a whiff of sympathy for that big band of brothers and sisters we like to collectively call the U.S. Taxpayer.

After all, it’s the taxpayer that’s largely responsible for funding TARP, enacted after the financial meltdown to enable the government to purchase toxic or illiquid assets from banks and other financial institutions.

So trying to rip off the TARP program is like, well, going for the collective front pocket of the nation in an attempt to pull out some change. The gall.

On Monday, TARP-related allegations were lodged by federal prosecutors against Charles J. Antonucci Sr., the former president and chief executive of The Park Avenue Bank in New York. Among the charges: wire fraud, bank bribery, embezzlement and, yes, attempting to defraud the TARP program. Click here for the WSJ story, from Chad Bray; here for the criminal complaint.

“These charges are what they are,” said Stillman, Friedman & Schechtman’s Charles Stillman, a lawyer for Antonucci. “We’re going to study them and consider what our appropriate response to the charges will be.”

Bray reports that the allegations are one of the first publicly announced cases of fraud against TARP. Prosecutors allege that Antonucci engaged in several schemes to defraud the bank and its regulators, including making false statements in connection with an application by the bank for more than $11 million in TARP funds in 2008.

He later withdrew his application, after the bank regulator said it would not recommend the TARP application for approval. But when asked to explain his withdrawal, according to this Q&A with Bank Info Security, Antonucci answered:

It was two things: Nobody really knows what the rules are going to be in terms of those who take and utilize the TARP money . . . . And secondly, there is market perception that if you take TARP money, that you are now a bad bank, which is a perception that nobody wants whether you are or you aren’t.

Antonucci was president and chief executive of the bank from June 2004 until his resignation in October 2009.