Former Wilmington Trust Officer Indicted on Bank Fraud, Bank Bribery, and Money Laundering Charges

WILMINGTON, DE—Charles M. Oberly, III, United States Attorney for the District of Delaware, announced today that Brian D. Bailey, age 51 of Middletown, Delaware, was charged on February 4, 2014, in a 14-count indictment with the following offenses:

• Count one charges the defendant with conspiracy to commit bank fraud, in violation of Title 18, United States Code, Sections 1344 and 1349. The maximum penalties for count one are a term of imprisonment of thirty years; a fine of $1,000,000; a term of supervised release of five years; a $100 special assessment; and mandatory restitution.
• Count two charges the defendant with conspiracy to commit bank bribery, in violation of Title 18, United States Code, Sections 215 and 371. The maximum penalties for count two are a term of imprisonment of five years; a fine of $250,000; a term of supervised release of two years; a $100 special assessment; and mandatory restitution.
• Counts three through 11 charge the defendant with bank fraud, in violation of Title 18, United States Code, Sections 1344 and 2. The maximum penalties for each of counts three though 11 are a term of imprisonment of thirty years; a fine of $1,000,000; a term of supervised release of five years; a $100 special assessment; and mandatory restitution.
• Count 12 charges the defendant with receipt of a gift for procuring a loan, in violation of Title 18, United States Code, Sections 215(a)(2) and 2. The maximum penalties for count 12 are a term of imprisonment of 30 years; a fine of $1,000,000; a term of supervised release of five years; a $100 special assessment; and mandatory restitution.
• Count 13 charges defendant with unlawfully providing a gift with an intent to influence a bank employee, in violation of Title 18, United States Code, Sections 215(a)(1) and 2. The maximum penalties for count 13 are a term of imprisonment of 30 years; a fine of $1,000,000; a term of supervised release of five years; a $100 special assessment; and mandatory restitution.
• Count 14 charges the defendant with money laundering, in violation of Title 18, United States Code, Section 1957. The maximum penalties for count 14 are a term of imprisonment of 10 years; a fine of $250,000; a term of supervised release of three years; and a $100 special assessment.

Mr. Bailey made his initial appearance today before Chief United States Magistrate Judge Mary Pat Thynge. His next court appearance, an arraignment on the charges, is set for Wednesday, February 19, 2014, at 1:00 p.m.

The indictment alleges that Mr. Bailey, the former head of Commercial Real Estate and Delaware Market Manager of the Wilmington Trust Co., engaged in a 12-year lending relationship with James A. Ladio, the former chief lending officer at Artisans’ Bank and chief executive officer of MidCoast Community Bank. According to the indictment, the defendant and Ladio approved approximately 23 loans and modifications to each other through their positions at Wilmington Trust, Artisans, and MidCoast, respectively. The loan relationship, as alleged in the indictment, is summarized in the below chart. The indictment further alleges that the aggregate amount of all the loan facilities was in excess of $1.5 million.

United States Attorney Oberly said, “The indictment alleges that the defendant entered into a long-term scheme with another banker to provide multiple loans to each other on terms not available to the general public, all the while failing to disclose their relationship to their respective banks. This office remains steadfast in its continuing commitment to combat financial fraud and corruption, and to deter other individuals from similar alleged misconduct.”

“Brian Bailey is the second officer charged with bank fraud conspiracy at Wilmington Trust, a TARP bank that ended up being acquired by another TARP bank,” said Christy Romero, Special Inspector General for TARP (SIGTARP). SIGTARP and our law enforcement partners will aggressively investigate allegations of fraud by officers of TARP banks, and perpetrators will be held accountable for their crimes.”

“The indictment of this bank official alleges the misuse of his position of trust within his corporation,” said Special Agent in Charge Akeia Conner, IRS-Criminal Investigation. “The IRS, along with our law enforcement partners, is committed to investigating individuals who use their position to commit fraud and to abuse public trust.”

The case was investigated by the Federal Bureau of Investigation; the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and the Internal Revenue Service-Criminal Investigation Division, and it is being prosecuted by Assistant United States Attorneys Robert F. Kravetz, Lesley F. Wolf, and Ilana H. Eisenstein.

Members of the public are reminded that an Indictment is only an allegation and that a defendant is presumed innocent until proven guilty.