The former chief credit officer and controller of Wilmington Trust were sentenced to prison Wednesday, capping the prosecution of four top executives for their roles in a massive reporting scandal that hid hundreds of millions of dollars in bad loans and ultimately led to the bank’s downfall.
U.S. District Judge Richard G. Andrews of the District of Delaware sentenced William North, Wilmington Trust’s lead credit officer, to four and a half years in prison and a $100,000 fine. Kevyn Rakowski, the bank’s former controller, received a sentence of three years.
Both men were convicted in May, along with former Wilmington Trust president Robert V.A. Harra and David Gibson, who served as the bank’s chief financial officer, of multiple crimes stemming from the bank’s collapse in 2011.
On Monday, Andrews sentenced Harra and Gibson both to six years in prison and ordered them each to pay $300,000 in fines.
During a two month trial, federal prosecutors proved all four defendants conspired to falsely report to regulators and investors the amount of the bank’s past due loans, causing the bank to underreport approximately $300 million in past due loans in the third and fourth quarters of 2009.
According to the indictment, the bank used the false securities filings to raise $287 million in a February 2010 stock sale. When the discrepancies were discovered in 2010, Wilmington Trust was sold to M&T Bank in a fire sale, which resulted in 700 employees losing their jobs.
U.S. Attorney David C. Weiss said Wednesday that the sentences sent a “clear message” that top corporate bankers cannot avoid reporting rules for disclosure regarding the soundness of financial institutions and their assets.
“The defendants’ actions contributed to the downfall of an important Delaware institution, causing hundreds of employees to lose their jobs and investors to lose hundreds of millions of dollars when the bank’s stock price collapsed,” Weiss said in a statement. “The sentences imposed by the court appropriately punish the defendants for their serious criminal conduct and strongly encourage other corporate executives to follow the law.”