The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) announced the latest enforcement action in its efforts stamp out fraud against banks that received TARP funds.
Peter Hayes, a former lender at TARP recipient Wilmington Trust of Delaware, was charged in a seven count indictment in connection with an alleged bank fraud scheme in which he and others benefited at the expense of the bank.
“Hayes stands charged with bank fraud, bribery, and fraudulently benefiting from loan transactions for a multitude of various offenses,” said Christy Romero, Special Inspector General for TARP. “This type of fraud and self-dealing is unacceptable, and SIGTARP and our law enforcement partners will pursue any offenders whose conduct jeopardizes taxpayers’ TARP investments to hold perpetrators accountable for their crimes.”
SIGTARP is involved in the prosecution of all cases involving crimes that have been committed against banks that received TARP funding during the financial crisis.
The indictment alleges that Hayes engaged in several fraudulent transactions with a single customer of the bank for his own benefit and the benefit of the customer.
First, Hayes knowingly caused Wilmington Trust loan funds to be disbursed to the Customer for purposes that were not authorized by the bank’s loan agreements with the Customer. Further, it accuses Hayes of submitting false information in support of draw requests to provide funding to the Customer. The requests included funds to cover overdrafts in the Customer’s operating bank account.
The indictment also alleges that Hayes caused the bank to lend funds without, loan committee approval, to an investment company founded by the Customer’s president, so that the company could purchase model homes. The model homes would then be leased back to the customer or others.
The government contends that Wilmington Trust suffered millions of dollars in losses associated with Hayes' fraudulent actions.
The maximum penalty for each of the seven counts is 30 years in prison and a fine of one million dollars.