DOVER, Del. (AP) — Four former executives for the only financial institution to be criminally charged in connection with the federal bank bailout program are asking a judge to overturn their fraud and conspiracy convictions.
Attorneys for the former Wilmington Trust executives argue in court papers filed Wednesday that the prosecution evidence wasn’t strong enough to support a jury’s guilty verdict on May 3.
U.S. District Court Judge Richard Andrews on Friday directed defense attorneys to submit written briefs by June 1. Prosecutors will have two weeks to file an answer, and the defense’s reply is due by June 22.
Defense attorneys initially filed motions for acquittal last month after prosecutors finished presenting their case, but Andrews has not yet ruled on them.
In the request resubmitted this week, defense attorneys said errors during the trial “had a substantial influence on the verdict” and are cause for the convictions to be overturned. Attorneys said if the judge won’t acquit their clients, he should grant a new trial.
Former Wilmington Trust president Robert Harra Jr., former chief credit officer William North, former chief financial officer David Gibson and former controller Kevyn Rakowski were convicted after a six-week trial on charges of fraud, conspiracy and making false statements to federal regulators.
Prosecutors alleged that in the wake of the 2008 financial crisis, bank executives misled regulators and investors about Wilmington Trust’s massive amount of past-due commercial real estate loans before the bank was hastily sold in 2011 while bordering on collapse. Founded by members of the DuPont family in 1903, the bank imploded despite receiving $330 million from the federal government’s Troubled Asset Relief Program.
The bank itself reached a $60 million settlement with prosecutors last year just as a trial was set to start. In reaching the settlement, Wilmington Trust did not acknowledge any liability.
Prosecutors said that instead of reporting the true amount of past-due loans, bank officials “waived” millions of dollars in matured loans from reporting requirements if the bank had designated the loans as being current on interest payments and in the process of being extended to allow more time for repayment, even if the necessary paperwork had not been done.
In the fourth quarter of 2009, for example, Wilmington Trust officials reported only $10.8 million in commercial loans as 90 days or more past due, concealing more than $316 million in past-due loans subject to the waiver practice, according to prosecutors.
To ensure that loans well past their repayment dates were exempt from reporting requirements, the bank lent even more money to struggling developers to make interest payments.
Meanwhile, before its 2011 fire sale to M&T Bank, Wilmington Trust raised $287 million in a 2010 stock offering, intended in part to help repay the TARP funds, while concealing the truth about its shaky financial condition from investors, prosecutors said.
Defense attorneys said their clients did nothing wrong and acted transparently while trying to steer the bank through difficult times.