FOR IMMEDIATE RELEASE
THURSDAY, AUGUST 27, 1998
TDD (202) 514-1888
U.S. SETTLES CIVIL SUIT WITH ARTHUR G. COHEN OF NEW YORK;
COHEN TO PAY RECORD $4.5 MILLION WASHINGTON, D.C. -- Arthur G. Cohen, a New York City real estate developer, has agreed to pay $4.5 million to resolve claims that he violated federal banking laws during the time he owned and controlled CorEast Savings Bank, FSB of Richmond, Virginia and its predecessors, under an agreement reached with the Department of Justice. The $4.5 million settlement represents the largest monetary recovery by the United States in a civil penalty action under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). Assistant Attorney General Frank W. Hunger of the Civil Division and Robert P. Crouch, Jr., U.S. Attorney in Roanoke, Va., said that the settlement resolves a complaint alleging that Cohen violated federal banking laws and committed other acts that contributed to the failure of CorEast. On the consent of the parties, Senior Judge Jackson L. Kiser of the U.S. District Court in Danville, Va., entered a Final Judgment today setting forth the terms of the settlement. According to a complaint filed on February 25, 1998, Cohen used his control of CorEast and its predecessors to alter the banks' geographic lending patterns and funnel millions of dollars in loans into several dubious New York City construction projects in which he had undisclosed interests. The banks included First Federal Savings and Loan Association of Roanoke; Colonial Savings and Loan Association of Richmond; and CorEast, which was formed through the merger of First Federal and Colonial in 1988. CorEast was placed into receivership by the Office of Thrift Supervision in 1991. "Congress enacted this statute to combat and remedy unlawful conduct that threatens the safety and soundness of the nation's financial institutions," said Hunger. "Today's settlement sends a clear message to the financial community: the law requires that all individuals entrusted with the management of financial institutions will abide by the law, all regulatory requirements, and the highest standards of corporate citizenship." The Final Judgment resolves the government's claims against Cohen and does not reflect any finding or admission of liability. It requires Cohen to pay $4.5 million to the United States. Claims against the remaining defendants in the action -- Lawrence M. Goodman, Ilyne R. Mendelson, Steven M. Terk, and Marvin B. Tepper -- have been dismissed with prejudice as part of the settlement. Hunger praised the efforts of the Federal Bureau of Investigation in conducting the investigation in this matter.