Brian Bailey was charged with engaging in a 12-year lending relationship with James Ladio in which the two men approved about 23 loans and loan modifications for each other worth more than $1.5 million.
Ladio is the former chief lending officer for Artisans' Bank and former chief executive officer of MidCoast Community Bank. He pleaded guilty in December to a four-count felony that charged him with bank fraud and money laundering involving MidCoast.
"Bailey stands accused of approving Wilmington Trust loans to Ladio outside of the normal process and lying to the bank [in claiming] that interest-only loans to Ladio were related to real estate when he knew Ladio was using the money for personal purposes," says Christy Romero, special inspector general for SIGTARP.
Wilmington Trust, a TARP recipient, was acquired by Buffalo, N.Y.-based M&T Bank Corp. in November 2010 for $351 million.
The indictment claims that Bailey obtained kickbacks on bank loans to Ladio. During a two-month period, Bailey received a $107,000 loan from Artisans to buy three cars, as well as additional loans from MidCoast to purchase a boat and pay off more than $45,000 in credit card debt, Romero claims.
It charges Bailey with nine counts of bank fraud and one count each of conspiracy to commit bank fraud, conspiracy to commit bank bribery, corruptly receiving a gift for procuring a loan, corruptly providing a gift with intent to influence a bank employee and money laundering.
Bailey is the second officer at Wilmington Trust charged with bank fraud. Last May, Joseph Terranova pleaded guilty to one count of conspiracy to commit bank fraud.
Bailey could be sentenced to more than 30 years in prison if he is convicted.