Former executive of failed bank charged with fraud in connection with TARP bid

The former head of a failed bank was arrested Monday and charged with 10 federal counts including allegations that he tried to fraudulently obtain millions through the TARP program, according to a statement from federal prosecutors.

Federal officials say that Charles Antonucci, former president and chief executive of The Park Avenue Bank, gave false statements as he sought more than $11 million in aid for his bank through the Troubled Asset Relief Program.

Antonucci is the first defendant to be charged with trying to defraud the program.  He also faces a slew of other charges related to his allege use of his position at the bank to enrich himself.

Antonucci paid $2 million bond Monday and surrendered his travel documents; he is not to leave the New York area.

Among the charges Antonucci faces are bank bribery, embezzlement of bank funds and fraud. He faces a maximum of 260 years in prison.

"Lying to financial regulators is the economic equivalent of obstruction of justice," said U.S. Attorney Preet Bhara in a statement.

Regulators closed Park Avenue Bank on Friday, and the Federal Deposit Insurance Corp. arranged for it to be taken over by Valley National Bank. The four-branch bank, which had $494.5 million in deposits and $520.1 million in assets, primarily served small businesses.

Antonucci was president and CEO from June 2004 to October 2009, and he also served on the bank's board of directors.

Antonucci is accused of "self dealing" by extending credit to customers to whom he had financial ties; granting overdraft credit to a customer in exchange for the use of his plane; and using the bank to pay expenses on properties he owned.

Prosecutors also say Antonucci used a complicated "round trip" transaction to try to defraud bank regulators into believing he had invested $6.5 million of his own money into the bank to try to increase its capital position and make it eligible for TARP funds. In actually, he had taken those very funds from the bank in the first place.

First, the bank loaned funds to entities tied to Antonucci. Then, those entities transferred the funds to Antonucci. Finally, he invested that money back into the bank - in exchange for common stock representing a 52 percent controlling interest in the bank's holding company.

As he sought $11 million in TARP funds from the Treasury Department, he "falsely represented that he had made a substantial, personal capital contribution to The Park Avenue Bank," prosecutors said.

Upon learning that the FDIC would not recommend his bank for TARP, he withdrew his application voluntarily, saying in a press release that the bank was strong and wanted to avoid the stigma of accepting government money.

"This case should stand as a stark warning to would-be wrongdoers that if you attempt to profit criminally from this historic program, SIGTARP and its law enforcement partners will work tirelessly to ensure that you will be caught, you will be charged, and you will be brought to justice," said Special Inspector General for TARP Neil Barofsky in a statement.

Additionally, an unnamed co-conspirator allegedly told pastors of Calvary Springs Chapel in Coral Springs, Fla. that if they invested $103,940 in the purchase of a bond, he would borrow four times that amount in foreign markets and pay the pastors the full maturity of the bond, $604,848, within weeks.

The co-conspirator simply had the pastors put the money into an account owned Antonucci, prosecutors said. They never received any money bank, and Antonucci and his co-conspirator split the pastors' money, prosecutors said.