State prosecutors speak about Wilmington Trust verdict Suchat Pederson and Daniel Sato, The News Journal


Roughly six years of criminal investigations led to a two-month-long trial last spring and ultimately a guilty verdict in May for four former Wilmington Trust executives.

Scheduled for October is sentencing for the multiple counts of bank fraud and conspiracy, which prosecutors say led to the 2011 downfall of the once-venerable bank.

Until then, the former bankers continue to fight for their freedom.

They include Wilmington Trust's former President Robert Harra Jr., former Chief Financial Officer David Gibson, former Chief Credit Officer William North and former Controller Kevyn Rakowski. The government did not criminally charge the bank's former CEO, Ted Cecala.

Defense attorneys filed a motion for acquittal shortly after the Delaware jury, made up of 11 women and one man, found there was sufficient evidence to prove that Wilmington Trust's executives intentionally made false statements to investors and regulators about the amount of past due commercial real estate loans held by the bank during the height of the Great Recession.

Prosecutors had claimed the executives used a second set of books to hide from financial reports a growing wave of toxic loans that totaled hundreds of millions of dollars.

Yet, jurors came to their conclusion because they were prejudiced by errors committed during trial, defense attorneys argued in their motion. Prosecutors, they said, presented no evidence that their clients intentionally committed any crime. 

Late on Tuesday, prosecutors filed their response. Listing a litany of evidentiary nuggets, the attorneys for the government said defendants' intent to defraud its shareholders and regulators was clear. 

They pointed to early 2009, when North claimed the bank's waived loans were preventing it from reporting "true past due" numbers.  

They also highlighted a 2009 email sent to Rakowski that outlined rules governing how a bank should report past due loans. Rakowski had kept a hard copy of the email, scribbled with handwritten notes, at her desk, prosecutors said.

Finally, the government noted that Harra and Gibson explained to investors during earnings calls that their matured loans were, in fact, past due — a contention contradicted by the defense during trial. 

"Now, post-trial, Defendants once again ask the Court to invalidate the jury’s reasoned conclusion and to reweigh the same trial evidence in Defendants’ favor. But, for the reasons set forth below, their request is unsupported by the facts and controlling law," prosecutors stated in their response to the acquittal motion. 

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For generations, the du Pont-founded Wilmington Trust had been known for its conservative approach and friendly customer service. As a result, many Delawareans, proud of the hometown story, bought shares in the venerable bank. Some did so when it raised $287 million during a 2010 stock offering. 

Months later, when the full scope of Wilmington Trust's toxic loans became publicly known, the bank was sold off to M&T Bank during one of the biggest fire sales in U.S. history. Bank executives collected huge bonuses, but shareholders watched the value of their Wilmington Trust stock fall by 46 percent in a single day.

Hundreds of Delawareans, whether laid-off Wilmington Trust employees or bank shareholders, were harmed by the rapid downfall.

Many of those expressed satisfaction on May 3 when jurors found the four former bankers guilty of more than a dozen felonies. They hoped the highly anticipated verdict would close a painful chapter of Delaware's history.

"I would have bet my life that that was a sound company," former shareholder and employee of the bank Erika Bush told the News Journal.

Yet, prior to the verdict, U.S. District Judge Richard G. Andrews had left open a question about the criminal intent of the defendants. Defense attorneys also had filed an acquittal motion prior to closing statements. They repeated claims that there was no evidence indicating the executives had intentionally committed fraud and conspiracy.   

Andrews denied the motion on the question of whether there was evidence that criminal acts had occurred but deferred a ruling on whether there was evidence that the defendants acted knowingly and willfully.  

With the defense's current motion to acquit, Andrews will have to rule on that point of criminal intent. The ruling is expected this month.


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