Former Midcoast Community Bank CEO Sentenced to 24 Months’ Imprisonment
WILMINGTON, DE—Charles M. Oberly, III, United States Attorney for the District of Delaware, announced today that United States District Judge Richard G. Andrews sentenced James A. Ladio, the founder and former CEO of Midcoast Community Bank, Inc. (“Midcoast”), to a term of imprisonment of 24 months.
Ladio, age 58, of Wilmington, Delaware, pleaded guilty on December 17, 2013, to two counts of bank fraud and two counts of money laundering. The charges related to a nominee loan scheme, in which Ladio recruited two former MidCoast customers to obtain loans, the proceeds of which they loaned back to Ladio.
According to facts revealed during the sentencing hearing, Ladio had been involved in a decade-long “loan-swap” arrangement with former Wilmington Trust Co. (“WTC”) Market Manager Brian Bailey, in which the two men provided more than twenty (20) loans to each other totaling in excess of $1.5 million. In June 2010, WTC called Ladio’s loans and required him to enter into a Global Restructuring Agreement (the “Agreement”). Ladio engaged in the nominee loan scheme in substantial part to make interest and principal payments under the Agreement.
United States Attorney Oberly said, “The Court rightly punished Mr. Ladio for his serious fraud offenses, which negatively impacted his bank and other financial institutions. Today’s sentence sends a powerful message that bankers who abuse their positions of trust and engage in self-dealing will face significant consequences, including imprisonment and being banned from banking.”
“Ladio, former president and chief executive officer of MidCoast Community Bank and a leader in the Delaware banking community, was sentenced to spend the next 24 months in federal prison for bank fraud against three banks, including TARP bank Wilmington Trust Corporation said Christy Romero, Special Inspector General for TARP (SIGTARP). “For more than a decade involving more than 20 transactions, Ladio lined his pockets by fraudulently securing Wilmington Trust loans through former Wilmington Trust officer Brian Bailey in exchange for Ladio making sweetheart loans to Bailey. Ladio used the loans to pay off personal debt. SIGTARP and our law enforcement partners will hold accountable perpetrators who engage in fraud related to TARP. We will not rest in our efforts to identify and investigate those individuals, unravel their crimes, and support their prosecution. We are proud to stand together with the United States Attorney’s Office for the District of Delaware in our combined fight against bailout related crime.”
“In recent years illegal activity involving the banking industry has brought financial ruin to many Americans, as well as to several American banks,” said Richard Goss, IRS Criminal Investigation Acting Special Agent in Charge. “This joint investigative effort continues to demonstrate our resolve to ensure that the financial services industry will not be used for personal financial gain and will be operated in a fair and honest manner to preserve the public interest.”
The case was investigated by the Federal Bureau of Investigation, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Internal Revenue Service Criminal Investigation Division, and the Office of Inspector General, Board of Governors of the Federal Reserve System. Assistant United States Attorneys Robert F. Kravetz and Lesley F. Wolf prosecuted the case.