Bank-Implode: Alleged Fraud at USA Bank of Greenwich

http://bankimplode.com/blog/2011/05/26/dealflow-fraud-allegations-erupt-for-fdic-shuttered-usa-bank-of-greenwich-ct/

“Executives in the failed USA Bank are being investigated by the Federal Deposit Insurance Corp., after investors alleged fraud and lending abuses.

The investigation includes staff from the FDIC’s Office of the Inspector General, which can refer its findings to the FBI for criminal prosecutions.

At the center of the investigation is a father-son team from Greenwich, Conn., who founded the bank: Fred DeCaro Jr. and Fred DeCaro III. A director of the bank began complaining to regulators about DeCaro Jr. and some of the bank’s board members in late 2006, within the first year of the bank’s formation.

Jones eventually received 27 loans on 12 properties, including second and third  loans. She filed for Chapter 11 bankruptcy protection in 2009.

Jones says that her name was forged on lending documents with USA Bank and that she had been unaware of some of the loans taken out in her name.  In a signed, notarized letter that Jones made available, it appears that DeCaro Jr. acknowledged that one of his staff forged Jones’ name. The staff member was fired, according to the letter.

Jones said she believed that the staffer was directed by DeCaro to forge her  name. She has shared these details with FDIC inspector Bill Mitchell and with Mike Rexrode, a special agent from the FDIC’s Office of the Inspector General.

Additionally, Jones said that she learned in 2007 that USA Bank had paid $500,000 of a $1.4 million construction loan she had taken out to a subcontractor without her permission. The contractor, Joe Tomonto, was related to DeCaro Jr., Jones says.”

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