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Ex-President of Orion Bank Gets 5 Years for Fraud

The former president of Orion Bank was sentenced to 6 years in federal prison for conspiring to commit bank fraud and making false statements to bank examiners, U.S. Attorney Robert E. O'Neill announced in a release.

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U.S. District Judge Charlene Edwards Honeywell sentenced Jerry J. Williams of Fort Worth, Texas, on Tuesday. Williams served as president, CEO, and chairman of the Board of Orion Bancorp and the former Orion Bank. The failed bank was headquartered in Naples, Florida and was closed by state regulators November 13, 2009.

According to the facts mentioned in his plea agreement, beginning in May 2009, Williams told executives and officers of Orion Bank to provide financing for a stock purchase, the result of which was a $15 million infusion into Orion Bancorp. The capital infusion made it appear to regulators that the bank's capital position had improved significantly.

To secure the capital infusion, Williams told bank executives to increase the amount of loans-in-process to straw borrowers to $82 million on behalf of Francesco Mileto.

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Williams directed the increase in loan earnings to provide and conceal $15 million for Mileto's purchase of Orion Bancorp stock even though laws prohibited the bank from financing the purchase of its own stock.

Mileto provided fraudulent financial documents to Orion Bank, reporting millions of dollars of annual income from an Italian family trust. When top Orion Bank executives discovered that Mileto had submitted fraudulent documents to support the June 2009 loans, Williams had the loans close to secure the capital infusion to the bank.

Williams was the only Orion Bank employee who had the authority to approve loans over $2 million for submission to the Orion Bank Board of Directors Loan Committee.

The investigation revealed that Williams caused Orion Bank executive VP Thomas Hebble to present loan packages for approval to the Orion Bank Board Loan Committee, despite knowing that the loan packages contained false and misleading information.

After SVP Angel Guerzon signed the fraudulent loans on behalf of Orion Bank, Williams lied to regulators about the source of the funds, categorizing the stock purchase as new capital even though $15 million of the capital raised was financed by the bank.

When questioned about the transactions by state and federal examiners, Williams and other bank executives provided false documentation to examiners.

Mileto, Hebble, and Guerzon were charged separately for their roles. Mileto was sentenced to 5 and a half years in prison, Hebble was sentenced to 2 and a half years, and Guerzon was sentenced to 2 years in prison.

The estimated cost of the bank's failure to the FDIC's insurance fund is $884 million.

About Author: Esther Cho

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