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FDIC seizes New York's Park Avenue Bank and LibertyPointe Bank

The CEO of Park Avenue is arrested and charged with embezzlement, bribery and fraud, partly related to the TARP program. LibertyPointe had failed under the weight of bad real estate loans.

March 15, 2010|By Nathaniel Popper

Reporting from New York — In the current wave of failures of federally insured banks, none occurred in New York City until late last week, when two small Manhattan financial institutions went under, with each collapse notable in its own way.

The chief executive of Park Avenue Bank, which was seized by regulators Friday, was arrested Monday, charged with embezzlement, bribery and fraud, including lying in an application for the Treasury Department's Troubled Asset Relief Program.

Like nearly all banks that fail, Park Avenue was shut down by the government at the end of the week, giving regulators the weekend to prepare with the help of bank employees for an orderly transition to the institution taking over the bank.

But the other New York bank that failed, LibertyPointe Bank, was seized Thursday. Because most of LibertyPointe's employees, like its customers, were Orthodox Jews, the Federal Deposit Insurance Corp. took action late Thursday to avoid doing so during the Jewish Sabbath, which begins at sundown Friday.

In the case of four-branch Park Avenue Bank, its CEO, Charles Antonucci, became the first bank executive to be charged with fraud in connection with TARP, officials said. According to a criminal complaint filed by prosecutors in federal court in Manhattan, Antonucci used "fictitious and fraudulent statements" to try to win $11.3 million from the bank bailout program in early 2009.

"Almost immediately after Treasury announced the details of the TARP program, Antonucci and Park Avenue launched their criminal enterprise, seeking to fleece the American taxpayer," Neil Barofsky, the Treasury's special inspector general for TARP, said at a news conference with Manhattan U.S. Attorney Preet Bharara.

Antonucci's application for TARP funds was denied.

The complaint filed by Bharara's office also says Antonucci received illegal favors from bank customers in exchange for granting them credit. The alleged favors included the free use of a customer's private jet to fly to such places as Arizona to attend the Super Bowl and to Georgia for the Masters golf tournament.

Barofsky and Bharara predicted criminal fraud charges would arise from other TARP-related probes.

"The charges filed today unfortunately will not be the last against . . . a TARP recipient," Barofsky said.

LibertyPointe's failure brought an emotional response in the Orthodox Jewish enclaves where two of the bank's three branches were located.

"My blessings to all the staff members who gave their best effort in trying to make LPB successful," one commenter wrote on an Orthodox Jewish news website.

LibertyPointe, founded by real estate developer and philanthropist Shaya Boymelgreen, failed under the weight of bad real estate loans, regulators said.

Park Avenue had $495 million in deposits. LibertyPointe had $210 million. In a deal with the FDIC, Valley National Bank of Wayne, N.J., acquired most of the assets of both failed banks and assumed their deposits.

The FDIC estimated that the two failures would cost the deposit insurance fund a total of about $75 million.


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