Federal judge Richard G. Andrews in Wilmington on Wednesday sentenced former Wilmington Trust Corp. Chief Credit Officer William North, 59, to four and a half years’ imprisonment and a $100,000 fine, and former Wilmington Trust Controller Kevyn Rakowski, age 65 to three years’ imprisonment.
The sentences were for their roles in concealing hundreds of millions of dollars in commercial real estate loan losses from investors buying newly-issued Wilmington Trust securities and from federal regulators.
Former President Robert Harra and former chief financial officer David Gibson were each sentenced Monday to six years in prison and $300,000 in cash. The executives are expected to appeal.
These sentences represent one of the few criminal cases to emerge from the 2008 financial crisis.
Wilmington Trust raised $287 million from investors in 2009 without disclosing that it faced hundreds of millions of dollars in bad-loan losses. The bank also accepted $330 million from the federal Troubled Asset Relief Program (TARP), which also was not informed about the bad development loans.
Wilmington Trust and its successor, M&T, agreed to pay the government $60 million in a civil settlement in exchange for a government agreement to drop criminal charges against the bank.
Last month, M&T agreed to pay $200 million cash to settle a civil fraud lawsuit filed by shareholders who said the trust’s failure to disclose its true condition cost them when it was sold at a price far below its already depreciated market value. The bank’s auditor, KPMG, also agreed to pay $10 million, the Associated Press reported.