Dover Developer Pleads Guilty to Bank Conspiracy
| U.S. Attorney’s Office October 07, 2013 |
Charles M. Oberly, III, United States Attorney for the District of Delaware, announced today that Salvatore J. Leone entered a guilty plea before the Honorable Gregory M. Sleet to a one-count felony information charging him with conspiracy to commit bank fraud, in violation of Title 18, United States Code, Section 1349.
According to the criminal Information and plea agreement, Leone was a project manager for and partner with Michael A. Zimmerman in several limited liability companies formed for the purpose of developing real estate in or around Dover, Delaware.
Between September 24, 2007 and February 27, 2009, Leone and others, including Zimmerman and an employee of Zimmerman’s real estate development company, BBC Enterprises, submitted or caused to be submitted false draw requests to Wilmington Trust Company. In particular, Leone admitted to the following acts during his plea hearing:
On or about September 24, 2007, Leone agreed to create a bill for Zimmerman for $231,000, purportedly for work performed on the Compass Pointe project, with intent to submit the bill to WTC for payment. However, as defendant and Zimmerman knew, the payment was not for work actually performed on Compass Pointe but was to be used by Leone to fund a capital call on at least one unrelated real estate project.
On or about October 28, 2008, Leone and Zimmerman submitted to WTC a fraudulent construction draw request for $8,568. The conspirators represented that these loan proceeds would be used to fund a change order associated with the Salt Pond project. Instead, Leone and Zimmerman used the loan proceeds for construction costs associated with an unrelated project.
On or about January 3, 2008, Leone and Zimmerman submitted to WTC a fraudulent construction draw request for approximately $170,000. Leone and Zimmerman represented that these loan proceeds would be used to fund construction costs associated with the Compass Pointe project, but $100,000 of these proceeds were instead converted into a check made payable to Zimmerman.
On or about January 15, 2008, Leone and Zimmerman submitted to WTC a fraudulent construction draw request for $375,000. Leone and Zimmerman represented that these loan proceeds would be used to fund architectural and engineering costs associated with the Shoppes at Fieldstone project. Instead, Leone and Zimmerman each received a check for $120,000, while the project account received only $135,000.
On or about February 27, 2009, Leone and Zimmerman misappropriated approximately $260,000 in escalated lease payments received from a lessee for the Shoppes at Fieldstone project. In the loan agreement for the Shoppes at Fieldstone project, it had been represented that the escalated lease payments would be reinvested back into that project. Rather than comply with the terms of the loan agreement, Leone and Zimmerman used the loan proceeds for another purpose, namely, the payment of a checks to Leone and Zimmerman, each in the amount of $130,000. Leone, age 50, is a resident of Dover, Delaware. He faces a maximum penalty of 30 years’ imprisonment, a $1,000,000 fine, and mandatory restitution.
Leone, age 50, is a resident of Dover, Delaware. He faces a maximum penalty of 30 years’ imprisonment, a $1,000,000 fine, and mandatory restitution.
United States Attorney Oberly said, “The charge against Mr. Leone and today’s guilty plea represent another step forward in this office’s investigation into the demise of the Wilmington Trust Corporation. We, and our investigative partners, remain determined to identify and prosecute abuses like this one that compromise the integrity of Delaware financial institutions.”
The case was investigated by the Federal Bureau of Investigation; the Internal Revenue Service Criminal Investigation Division; the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and the Office of Inspector General, Board of Governors of the Federal Reserve System, and it is being prosecuted by Assistant United States Attorneys Robert F. Kravetz and Lesley F. Wolf.