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U.S. judge will not disturb Wilmington Trust indictment linked to crisis
September 22, 2017 / 10:26 PM / 3 months ago

U.S. judge will not disturb Wilmington Trust indictment linked to crisis

NEW YORK (Reuters) - A federal judge in Delaware on Friday refused to let four former Wilmington Trust executives charged with bank fraud gather new evidence they hoped would prove that their indictment was tainted by false grand jury testimony and should be dismissed.

U.S. District Judge Richard Andrews’ decision preceded a scheduled trial next month of the former executives and Wilmington, the first recipient of federal bailout money in the 2008-2009 financial crisis to be indicted.

The former Wilmington executives are President Robert Harra, Chief Financial Officer David Gibson, Controller Kevyn Rakowski and Chief Credit Officer William North.

A lawyer who represented the executives did not immediately respond to requests for comment.

Prosecutors accused the defendants of hiding Wilmington’s deteriorating finances from October 2009 to November 2010, resulting in the company’s takeover by Buffalo, New York-based M&T Bank Corp (MTB.N) at a steep discount.

The defendants had objected to testimony in 2015 from a Federal Bureau of Investigation agent who said Federal Reserve banking officials had been unaware of Wilmington’s practice of not reporting matured past due loans.

They said this was inconsistent with what a senior Fed bank examiner had said in a 2013 interview, which three prosecutors who heard the FBI agent’s testimony had attended.

But Andrews said the FBI agent appeared to be discussing the bank examiner’s knowledge of Wilmington’s practice of “waiving” matured loans from public reporting, while the examiner appeared to be discussing Wilmington’s reporting of matured loans directly to him.

The judge also said it was unclear what time frames the FBI agent and bank examiner were discussing when being questioned.

“At most, then, defendants have shown the agent’s grand jury testimony may not have been complete or precise in one particular instance,” but that “is not enough to warrant dismissal of the indictment,” Andrews wrote.

The defendants had sought a hearing or permission to gather evidence related to the FBI agent’s testimony, which they hoped would result in the case’s dismissal.

M&T has not been accused of wrongdoing.

The case is U.S. v. Wilmington Trust Corp et al, U.S. District Court, District of Delaware, No. 15-cr-00023.

Reporting by Jonathan Stempel in New York; Editing by Jonathan Oatis

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