A former loan officer of Mitsui Manufacturers Bank in San Diego on Monday was charged with taking kickbacks on more than $1 million worth of unsecured loans made to unqualified bank customers in 1981 and 1982.
A 28-count federal indictment--issued last week but unsealed Monday--alleged that Patrick Arthur Castro, a former loan officer and vice president of Mitsui, and Herbert Thomas Cotter, a former La Jolla business consultant now living in Utah, omitted crucial loan information and made false entries in Mitsui's files on 19 loans.
In exchange, Castro and Cotter received kickbacks totaling about 10% of the $1.14 million in loans approved, according to the indictment. The loan amounts ranged from $15,000 to $100,000.
Prosecutors alleged that Cotter introduced the borrowers--most of whom were from out of town--to Castro.
Borrowers Not Charged
One of the borrowers was Cotter's girlfriend, Edythe Lindley, and two of the borrowers were Cotter's business partners, the indictment alleged.
None of the borrowers was charged, although the indictment described how both Castro and Cotter "accepted" payment from the borrowers.
Castro, reached at home late Monday, said he was surprised by the indictment and that his last contact with federal prosecutors was in November.
Castro, 51, called the charges "ridiculous" and said he has no idea why the government is making the charges.
Castro was fired from the bank in July, 1982, because of the allegations. He described his dismissal as "wrongful."
He has been virtually unemployed since then, he said.
Cotter could not be reached for comment. He is a founder of a company called Consolidated Pacific Holding Co. in La Jolla, according to the indictment.
Castro said he became aware of the grand jury's probe a year ago, when one of the borrowers filed a countersuit against Mitsui.
In the suit, the borrower said he had been told by an FBI agent that there was an "internal investigation about (my) previous employment and banking practices," Castro said.
The indictment alleged that the loans were made between June, 1981, and July, 1982. The loans were unjustified, prosecutors claimed, because there was "insufficient financial information" about the borrowers, the borrowers showed a "lack of creditworthiness" for the loans, and there was no independent corroboration of the borrowers' assets and financial condition.
The charges include conspiracy, misapplication of bank funds, aiding and abetting, making false entries in bank records and making false statements on credit applications.
The charges carry penalties ranging from two to five years in prison and fines of $5,000 to $10,000.
Mitsui Manufacturers Bank is the 16th-largest bank in California, with assets of about $1.8 billion and deposits of about $1.7 billion. The bank has 12 offices in the state, one of which is in San Diego.
The bank is a wholly owned subsidiary of Mitsui Bank Ltd. of Tokyo, a 300-year-old institution and the 19th-largest bank in the world, according to spokesman Alex Alt.
Bank officials would not comment on the specific charges against Castro.