The founder and former CEO of MidCoast Community Bank Inc. in Delaware was sentenced to two years in prison after pleading guilty to bank fraud and money-laundering charges, the U.S. Attorney's Office in Wilmington said Monday.

The Wilmington News Journal said James A. Ladio, 58, is the first person to be sentenced in a three-year probe of the fall of Wilmington Trust Co.

Prosecutors said Ladio recruited two customers of his own bank to take out loans, then to re-loan the money privately to Ladio. Ladio needed cash to repay Wilmington Trust loans that were part of a "loan-swap" arrangement between Ladio and a Wilmington Trust manager, federal prosecutors said. The Wilmington Trust manager, Brian D. Bailey, was charged in February with bank fraud.

- Reid Kanaley