Former Bank CEO And President Charged With Bank Fraud, Conspiracy And Perjury
Earlier today, an indictment was unsealed charging Poppi Metaxas, the former Chief Executive Officer (“CEO”) and President of Gateway Bank, FSB (“Gateway”), with bank fraud, bank fraud conspiracy and perjury. According to the indictment, in 2009, Metaxas fraudulently caused Gateway to execute a sham “round trip” transaction in which the bank self-funded a down payment to make it appear that Gateway had sold toxic, non-performing mortgage loans. This morning, the defendant surrendered to federal agents in California and was arraigned at the federal courthouse in San Francisco, California.
The arrest was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Christy Romero, Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), and David A. Montoya, Inspector General of the Department of Housing and Urban Development, Office of Inspector General (“HUD-OIG”).
The indictment alleges that in February and March 2009, Metaxas engaged in a scheme to defraud Gateway in connection with Gateway’s sale of non-performing mortgage loans to three entities in exchange for $15 million. Specifically, Metaxas caused Gateway to enter into a sham agreement to loan money to Ideal Mortgage Bankers Ltd. d/b/a Lend America (“Lend America”), a mortgage lender and Gateway’s largest mortgage lending client. Lend America in turn provided that money to the three entities that were planning to purchase the non-performing mortgage loans. Thus, Metaxas and others, through a series of wire transfers, used the proceeds of the sham loan to Lend America to satisfy the 25% down payment that the three entities owed to Gateway in connection with the sale of the mortgage loans, in order to deceive observers and regulators into believing that Gateway had successfully removed these toxic assets from its books. To conceal the fraudulent “round trip” of the loan funds, in October 2009, Metaxas provided false testimony to the Office of Thrift Supervision when she was asked about the source of the down payment.
“As alleged in the indictment, Poppi Metaxas placed herself above the interests of the bank, her board of directors, and the regulators, and lied to and misled those around her. She abused the trust placed in her by the bank, and committed fraud,” stated United States Attorney Lynch. “Other executives who mislead their company’s board or regulators should be on notice. Working with our law enforcements partners, both federal and local, we will find you, and we will hold you accountable in a court of law.” Ms. Lynch expressed her grateful appreciation to New York State Department of Financial Services and the Office of Comptroller of the Currency.
“As alleged, Metaxas engaged in a scheme to defraud her employer using lies and misrepresentations in connection with the sale of non-performing mortgage loans. The FBI, along with its law enforcement partners, remains committed to investigating those who prey upon our financial institutions and their customers. Those who engage in this type of financial fraud will be identified and held accountable,” stated FBI Assistant Director-in-Charge Venizelos.
“In the last number of years, we have seen enormous and damaging developments in the mortgage and housing markets. Indictments such as this set an important precedent that bad banker behavior will not be tolerated and will be aggressively pursued. We are deeply committed to working in partnership with other federal, state, and local authorities to ensure that corrupt individuals do not use their positions to enrich themselves at the expense of the government,” said HUD-OIG Inspector General Montoya.
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorneys Martin Coffey, Walter Norkin, and John Nowak.
This prosecution was the result of efforts by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.
E.D.N.Y. Docket No. 14-CR-190 (JFB)