Former Wilmington Trust Officer Indicted On Bank Fraud, Bank Bribery, And Money Laundering

WILMINGTON, Del. – Charles M. Oberly, III, United States Attorney for the District of Delaware, announced today that Brian D. Bailey, age 51 of Middletown, DE, was charged on February 4, 2014, in a fourteen-count Indictment with the following offenses:

• Count 1 charges the defendant with Conspiracy to Commit Bank Fraud, in violation of Title 18, United States Code, Sections 1344 and 1349.  The maximum penalties for Count 1 are a term of imprisonment of thirty years; a fine of $1,000,000.00; a term of supervised release of five years; a $100 special assessment; and mandatory restitution.

• Count 2 charges the defendant with Conspiracy to Commit Bank Bribery, in violation of Title 18, United States Code, Sections 215 and 371. The maximum penalties for Count 2 are a term of imprisonment of five years; a fine of $250,000.00; a term of supervised release of two years; a $100.00 special assessment; and mandatory restitution.  

• Counts 3 through 11 charge the defendant with Bank Fraud, in violation of Title 18, United States Code, Sections 1344 and 2.  The maximum penalties for each of Counts 3-11 are a term of imprisonment of thirty years; a fine of $1,000,000.00; a term of supervised release of five years; a $100.00 special assessment; and mandatory restitution. 

• Count 12 charges the defendant with receipt of a gift for procuring a loan, in violation of Title 18, United States Code, Sections 215(a)(2) and 2.  The maximum penalties for Count 12 are a term of imprisonment of 30 years; a fine of $1,000,000.00; a term of supervised release of five years; a $100.00 special assessment; and mandatory restitution.

• Count 13 charges defendant with unlawfully providing a gift with an intent to influence a bank employee, in violation of Title 18, United States Code, Sections 215(a)(1) and 2.  The maximum penalties for Count 13 are a term of imprisonment of 30 years; a fine of $1,000,000.00; a term of supervised release of five years; a $100.00 special assessment; and mandatory restitution.

• Count 14 charges the defendant with money laundering, in violation of Title 18, United States Code, Section 1957.  The maximum penalties for Count 14 are a term of imprisonment of ten years; a fine of $250,000.00; a term of supervised release of three years; and a $100 special assessment. 

 Mr. Bailey made his initial appearance today before Chief United States Magistrate Judge Mary Pat Thynge.  His next court appearance, an arraignment on the charges, is set for Wednesday, February 19, 2014, at 1:00 p.m.

The Indictment alleges that Mr. Bailey, the former head of Commercial Real Estate and Delaware Market Manager of the Wilmington Trust Co., engaged in a twelve-year lending relationship with James A. Ladio, the former Chief Lending Officer at Artisans’ Bank and Chief Executive Officer of MidCoast Community Bank.  According to the Indictment, the defendant and Ladio approved approximately twenty-three loans and modifications to each other through their positions at Wilmington Trust, Artisans, and MidCoast, respectively.  The loan relationship, as alleged in the Indictment, is summarized in the attached chart.  The Indictment further alleges that the aggregate amount of all the loan facilities was in excess of $1.5 million. 

United States Attorney Oberly said, “The Indictment alleges that the defendant entered into a long-term scheme with another banker to provide multiple loans to each other on terms not available to the general public, all the while failing to disclose their relationship to their respective banks.  This Office remains steadfast in its continuing commitment to combat financial fraud and corruption, and to deter other individuals from similar alleged misconduct.”

“Brian Bailey is the second officer charged with bank fraud conspiracy at Wilmington Trust, a TARP bank that ended up being acquired by another TARP bank,” said Christy Romero, Special Inspector General for TARP (SIGTARP).  SIGTARP and our law enforcement partners will aggressively investigate allegations of fraud by officers of TARP banks, and perpetrators will be held accountable for their crimes.”

"The indictment of this bank official alleges the misuse of his position of trust within his corporation," said Special Agent in Charge Akeia Conner, IRS Criminal Investigation.  "The IRS, along with our law enforcement partners, is committed to investigating individuals who use  their position to commit fraud and to abuse public trust.”

The case was investigated by the Federal Bureau of Investigation; the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and the Internal Revenue, Service Criminal Investigation Division, and is being prosecuted by Assistant United States Attorneys Robert F. Kravetz, Lesley F. Wolf, and Ilana H. Eisenstein.

Members of the public are reminded that an Indictment is only an allegation and that a defendant is presumed innocent until proven guilty.

APPENDIX A

Date            Recipient       Bank/Loan No.    Loan Amt.                    Description

July 9, 2001	Ladio	WTC (9003)	$29,000.00	Interest-only, six-month commercial demand line of credit
Jan. 4, 2002	Bailey	Artisans	$34,000.00	Automobile Loan for Ford F-150 Truck
Jan. 22, 2002	Bailey	Artisans	$40,000.00	Automobile Loan for Mercedes E-Series Sedan
Jan. 30, 2002	Ladio	WTC (9004)	$22,000.00	Interest-only, six -month commercial demand loan
Feb. 6, 2002	Bailey	Artisans	$33,000.00	Automobile Loan for Porsche Boxster
July 3, 2002	Ladio	WTC (9005)	$27,000.00	Interest-only, six month commercial demand loan (extension of Jan. 2002 loan, adding $5,000.00 in additional funds; extended again, at same terms, on Dec. 23, 2002)
Oct. 8, 2003	Bailey	Artisans	$15,000.00	Unsecured consumer demand loan
Nov. 18, 2003	Ladio	WTC (9006)	$69,138.46	Five-year term loan issued to pay- off $29K and $27K loans, set forth above, and for working capital

  Date                Recipient     Bank/Loan No.   Loan Amt.                  Description

June 30, 2004	Bailey	Artisans	$20,000.00	Interest-only commercial working capital line of credit
Aug. 13, 2004	Ladio	WTC	$9,000.00 (1001/1099)	Interest-only, commercial working capital demand line of credit
Sept. 29, 2004	Ladio	WTC	$20,000.00 (1101/1199)	Interest-only, unsecured working capital line of credit
April 4, 2005	Ladio	WTC	$150,000.00 (1201/1299)	Interest-only unsecured commercial demand line of credit
May 3, 2006	Bailey	Artisans	$175,000.00 (3281)	Two-year, interest-only, commercial line of credit
May 3, 2006	Ladio	WTC	$165,000.00 (5001)	Interest-only, commercial demand line of credit with three-year expiration
March 14, 2007	Ladio	WTC	$225,000.00 (5101)	Unsecured, interest-only commercial line of credit
Dec. 4, 2007	Bailey	MidCoast	$200,000.00 (1003)	Five year commercial loan, the proceeds of which were used to pay-off May 2006 Artisans loan.
May 30, 2008	Bailey	MidCoast	$33,000.00 (1011)	Consumer Loan to refinance a 2007 Mercedes E-Class Sedan
Sept. 9, 2008	Ladio	WTC	$285,000.00 (5101)	Increase in March 2007 line, adding $60,000.00 and changing to a demand loan

Date                Recipient      Bank/Loan No.   Loan Amt.                  Description

Nov. 10, 2008	Bailey	MidCoast	$37,000.00 (1016)	Eighteen-month, unsecured consumer term loan
Aug. 7, 2009	Bailey	MidCoast	$70,000.00 (1000)	Three-year, interest-only, unsecured consumer line of credit
March 31, 2010	Bailey	MidCoast	$100,000.00 (1000)	Increase in Aug. 2009 line of credit by $30,000.00
July 12, 2010	Ladio	WTC	$615,162.13	Forbearance agreement between Ladio and WTC after WTC called four outstanding Ladio demand loans
Oct. 29, 2010	Ladio	MidCoast Cust. A	$650,000.00	Private loan secured by Ladio, in part, to make payments under Forbearance Agreement obligations with WTC
July 14, 2011	Ladio	MidCoast Cust. B	$650,000.00	Private loan secured by Ladio to pay off outstanding balance under Forbearance Agreement to WTC
May 23, 2013	Bailey	MidCoast	$90,000.00	Secured, home equity line of credit, the proceeds of which were used to pay-off $100,000.00 unsecured MidCoast line of credit