The Park Avenue Bank TARP fraud arrest likely first of more to come, U.S. attorney says

Alleged transfer of funds from companies linked to Charles Antonucci, former president of the now-shuttered Park Avenue Bank, back to him and then reinvested in the bank. (Click image for larger version.)

Marking the first ever prosecution of alleged fraud against the Trouble Asset Relief Program, Charles Antonucci, the former president of the Park Avenue Bank, now shuttered, was arrested this morning and charged with embezzlement, bribery and allegedly trying to defraud the program of $11.2 million.

U.S. Attorney Preet Bharara in New York warned that while this was the first ever TARP prosecution, his office had recently ramped up staffing and expected the probe to continue. “We expect [this] will not be the last,” Bharara said.

Federal prosecutors allege that Antonucci approved loans and lines of credit to companies that he invested in, made false statements to federal regulators to apply for TARP funds and arranged for the bank to lease properties that he personally owned in New York. Antonucci is also charged with defrauding a church in Coral Springs.

Prosecutors say Antonucci received free flights from a company controlled by an account holder at the bank. He is alleged to have used the flights visit his relatives in Florida, attend
the Super Bowl in Phoenix and the Masters golf tournament in Augusta,
Ga. While he was accepting plane rides, he authorized bank employees
to approve the payment of more than $8 million in overdrafts by the company.

“Antonucci allegedly put his personal greed ahead of his professional duty, deliberated and repeatedly deceived regulators and even attempted to obtain through fraud more than $11 million in taxpayer rescue funds through the Troubled Asset Relief program or TARP,” Bharara said.

Antonucci’s attorney, Charles Stillman, said he just received a copy of the charges and would not immediately comment. 

As previously reported by The Real Deal, the New York State Banking Department shut down the bank late Friday afternoon, one day after it shut down developer Shaya Boymelgreen’s LibertyPointe Bank. The assets and deposits of both banks were sold to Valley National Bank, a Wayne, N.J.-based lender. 

Park Avenue Bank, originally established in 1987, changed its status from a nationally chartered bank to a New York State chartered bank in 2004, after a change in management, according to the federal complaint. 

Antonucci, besides being president and CEO of the bank, owned several outside firms, called Bedford Consulting Group, a Fishkill-based loan review company and Easy Wealth Group, a firm that imported promotional material, including pens and lapels. 

Meanwhile, an alleged co-conspirator and account holder at the bank, whom prosecutors did not name, owned a number of Louisville, Ky.-based firms that bank employees called the Oxygen-related entities, including Oxygen Unlimited, H2H Holdings, River Falls Financial Services, SDH Realty and TSV Capital, among others. Another firm, called the U.S. Insurance Group, was related to the firm, and held accounts at the bank.

Antonucci also allegedly engaged in a series of deals for the bank to loan $6.5 million to the Oxygen-related entities and USIG, which then transferred the money directly to him. He then deposited these funds into the bank, claiming these were his personal funds to help recapitalize the bank when federal and state regulators issued a 2008 report calling the bank “deficient.” 

Antonucci is also charged with defrauding Cavalry Springs Chapel in Coral Springs. Pastors at the church were interested in obtaining investment income for a new church. An
alleged co-conspirator of Antonucci promised the pastors that if they
invested $103,940 in a bond, that the co-conspirator could borrow up to
four times that amount of money in foreign markets and pay them back
$604,848 within two to three weeks, according to the complaint.

The money was held in a Park Avenue Bank account under the name
Park Avenue Insurance, however the money was never paid back. The
co-conspirator and Antonucci divided the money among themselves, the
complaint states.