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Press Release

Warren County Man Admits Role in Scheme to Deceive Bank and Bank Regulators

For Immediate Release
U.S. Attorney's Office, District of New Jersey

NEWARK, N.J. – A Warren County, New Jersey, man today admitted his role in a scheme to defraud a bank and bank regulators, Acting U.S. Attorney Rachael A. Honig announced.

Gary Ketchum, 73, of Hackettstown, New Jersey, pleaded guilty by videoconference before U.S. District Judge Kevin McNulty to a superseding information charging him with one count of conspiring to make false entries to deceive First State Bank and to deceive the Federal Deposit Insurance Corporation, FSB’s regulators.

According to documents filed in this case and statements made in court:

A three-phase scheme took place from 2009 to 2010. The first phase was to fraudulently infuse $7 million of capital into First State Bank (FSB). In the second phase of the scheme, conspirators caused FSB to make millions of dollars in loans based on material misrepresentations to cover up the fraudulent nature of the capital infusion and to end inquiries from FSB’s auditors. The final phase involved lying to the FDIC and FSB, among others, about the fraudulent capital infusion and loans.

In May 2017, a conspirator, Donna Conroy, pleaded guilty to her role and is awaiting sentencing. In October 2018, Ketchum, along with conspirators Joseph Natale, former CEO of FSB, formerly of Cranford, New Jersey, and Albert Gasparro were charged by indictment with conspiracy to deceive the FDIC and FSB, deceiving those two entities, conspiracy to commit bank fraud, and bank fraud. Natale is scheduled stand trial before Judge McNulty beginning on Nov. 1, 2021. The charges against Gasparro remain pending.

The conspiracy count to which Ketchum pleaded guilty carries a maximum potential penalty of five years in prison and a fine of $250,000, or twice the gross pecuniary gain derived from the offense or twice the gross loss sustained by any victim. Sentencing is scheduled for June 28, 2021. 

Acting U.S. Attorney Honig credited special agents of the FDIC – Office of Inspector General, under the direction of Special Agent in Charge Patricia Tarasca; special agents of the FBI, Newark Division, Red Bank Resident Agency, under the direction of Special Agent in Charge George M. Crouch Jr.; and inspectors of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), under the direction of Special Inspector General Christy Goldsmith Romero, with the investigation leading to today’s guilty plea.

The government is represented by Ari B. Fontecchio of the Economic Crimes Unit of the U.S. Attorney’s Office, District of New Jersey.

The charges and allegations against the remaining defendants are merely accusations, and they are presumed innocent unless and until proven guilty.

Updated February 17, 2021

Financial Fraud
Press Release Number: 21-063