PhillyDeals: Another former Wilmington Trust lender is indicted

Posted: July 18, 2014

Another former lender for Wilmington Trust Co. - Delaware's dominant bank before it drowned in a sea of unpaid loans and was salvage-sold at a bargain price in 2010 - has been indicted by federal prosecutors in connection with alleged illegal lending to developers.

Peter W. Hayes worked for the bank for 20 years before leaving in 2011. The indictment says Hayes lent $195 million to a developer while he was secretly invested in the developer's properties, and accuses him of using "false" and insufficient documents to justify loans that the developer didn't repay.

"He has consistently denied criminal wrongdoing" and will plead not guilty, Hayes' lawyer, Eugene Maurer, told me. Hayes faces a sentence of 210 years in prison and $7 million in fines if convicted of all five counts of fraud and two counts of bribery, according to U.S. Attorney Charles Oberly.

The developer was not identified in Oberly's indictment but has been outed by the Wilmington News Journal as Anderson Homes, a Middletown company that went under in 2011. Anderson and its past owners have not been charged with wrongdoing.

In February 2013, former Wilmington Trust lender Kevin McAllister was sentenced to 20 months for fraud, bribery, and tax evasion for taking kickbacks from a Delaware County mortgage broker in exchange for loans that went unpaid.

Joseph Terranova, former vice president in the bank's commercial real estate unit, pleaded guilty last year to "conspiring to extend credit to customers of the bank under terms inconsistent with those approved by the bank's loan committee." His former boss, ex-Wilmington Trust banking chief for Delaware Brian D. Bailey, was indicted last winter on bribery, fraud, and money-laundering charges. Bailey and Oberly's office have been working on a plea agreement.

At least two developers have been indicted on charges of borrowing money from the bank illegally, apparently with the connivance of bank lenders.

Who was watching these guys? Oberly hasn't filed charges against senior management of the bank, whose forced sale cost investors more than $1 billion from the bank's earlier stock-market value and resulted in the loss of more than 700 jobs.

The Wilmington prosecutor is unusual these days in finding loan fraud a criminal act at all. Compare that with the government's $7 billion cash settlement this week with Citigroup, where billions in bad loans were falsely called good ones and sold to investors, feeding the financial blow-up of 2008. In that deal, no lender or boss who profited from the sales is being held personally responsible.


Claiming that "existing data centers in Philadelphia are woefully inadequate for today's cloud and network application businesses," vXchnge L.L.C., of Tampa, Fla., says it plans to build a 70,000-square-foot "state of the art" data center at 1500 Spring Garden St., the former GlaxoSmithKline pill factory already a major data site for Wayne-based SunGard Availability.

vXchnge's boss is Keith Olson, an AT&T veteran. Other bosses include former Unisys executives Charles Browning and Ernie Sampera.



comments powered by Disqus