Charles J Antonucci Case
This paper focuses on the actions of Charles J. Antonucci, Sr., who contributed greatly to the failing of The Park Avenue Bank in New York. Unless otherwise noted, the facts of this case were learned in whole and in part from the complaint filed against Antonucci by Ricardo Velez, the Director of the Criminal Investigations Bureau of the New York State Banking Department.
The Park Avenue Bank, so named because its headquarters were located at 460 Park Avenue in New York City, was founded in 1987. In 2004, the Bank underwent a recapitalization and restructuring that resulted in a change of management. It was at this time that Charles J. Antonucci, Sr., became the president and CEO of the Park Avenue Bank. He also assumed a place on the Bank’s Board of Directors. Antonucci was responsible for organizing a group of investors that invested more than $10 million into the Park Avenue Bank in 2004, which had four retail branches in the Manhattan and Brooklyn areas of New York City, and he apparently impressed those investors with his previous work in turning around troubled banks (Wei and Bray).
In addition to holding CEO, president, and board positions for the Park Avenue Bank, Antonucci was also involved in a number of other businesses. Antonucci was also the 100% owner of Bedford Consulting Group, Inc., Easy …show more content…
Wealth Group, Ltd., and the Park Avenue Property and Casualty Insurance Company. Additionally, he had 20% ownership in three properties in Fishkill, NY: one at 1042 Main Street, another at 2 Broad Street, and the last at 48 Jackson Street. Furthermore, Antonucci also held 20% ownership in a company called TSV Capital. All of these businesses will play roles in the schemes in which Antonucci engaged.
In short, Antonucci abused his position at the Park Avenue Bank by engaging in at least eight different schemes involving fraud and/or misuse of company funds. In a majority of these schemes, he had help in the form of co-conspirators, none of whose identities have been revealed at this point. The main co-conspirator will be referred to as Mr. X throughout this paper. Although it is unknown how many people work for him, at least three of Mr. X’s employees and/or associates also conspired with Antonucci. Those three are referred to as Mr. W, Mr. Y, and Mr. Z.
Mr. X became a client of the Park Avenue Bank in 2007, and he brought with him a number of different businesses, each one of which required a separate account at the Bank. In the complaint against Antonucci, those businesses are referred to as the “Oxygen-related entities” and include the following companies: Oxygen Unlimited, LLC; Oxygen Unlimited II, LLC; O2HR; PSQ, LLC; River Falls Financial Services; SDH Realty, Inc.; and TSV Capital, LLC. As was noted above, Antonucci had 20% ownership of TSV Capital. As with the businesses that Antonucci owned, many of the Oxygen-related entities figured into the scams that Antonucci and his co-conspirators carried out. One additional company that played a key role was the US Insurance Group, or USIG. USIG also had an account at the Bank, and Oxygen Unlimited had a 25% put option on USIG, which suggests that Mr. X had a hand in USIG as well. Furthermore, Mr. X’s administrative assistant was an account signer on all of the Oxygen-related entities as well as on the USIG account.
As aforementioned, Antonucci was involved in at least eight different schemes in his time at the Park Avenue Bank. One of these involved the leasing and maintenance of the three properties in Fishkill, NY, in which he had partial ownership. Beginning sometime in 2005, the Park Avenue Bank began leasing the house at 1042 Main Street. The first floor of the house was reserved for the Bedford Consulting Group, which was owned by Antonucci, and the second floor was used as an office by Bank employees. Additionally, the Bank paid approximately $750,000 to have a storage center built behind the house to accommodate the Bank’s information technology recovery equipment. The Park Avenue Bank also entered into lease agreements in 2008 for both the property at 2 Broad Street and at 48 Jackson Street. Although Antonucci indicated that both properties would be used as storage/disaster recovery sites by the Bank, as of 2010, the Bank had yet to use either property in any way. However, despite using only one of the three properties, the Bank paid out more than $1 million in rent and other expenses to these three properties. At no time was it disclosed that Antonucci had part ownership of any of these buildings.
Another scheme involves another one of the companies that Antonucci owned - Easy Wealth Group, Ltd. In early 2006, Antonucci approached one of his associates with a “business opportunity”: Easy Wealth was losing money, and Antonucci was hoping to recoup his investment. He therefore asked his associate to “take over” the business, promising that the Park Avenue Bank would provide financing. Antonucci helped his associate prepare the necessary loan paperwork, making it appear that the associate had owned Easy Wealth since 2004 and omitting any connection with Antonucci. He also helped to create false documents for the application, including a falsified profit and loss statement for Easy Wealth’s 2005 fiscal year, and false personal financial statements for his associate. Based on the falsified application, the Bank approved a loan of $300,000 to Easy Wealth. At no time was Antonucci’s ownership or and financial interest in Easy Money disclosed. In fact, Antonucci himself personally approved the $300,000 loan.
Shortly after his associate was approved for the loan, Antonucci asked his associate for $70,000 in two interest-free “loans”. Both times, the associate made checks payable to Bedford Consulting Group. Antonucci finally repaid some of the money in 2008, but never repaid $20,000 of the “loan” nor any of the interest that the associate had to pay on the money.
Between May 2006 and June 2009, Antonucci incrementally approved credit increases to Easy Wealth from the original $300,000 to $400,000. He also twice extended the loan due date by a year (for a total of two years), and then in April 2009 extended the due date by another 90 days. In June 2009, Easy Wealth ceased to operate and Antonucci’s associate filed for bankruptcy. At that time, Easy Wealth still owed the Bank the entire $400,000 balance. The Bank therefore had to write off the entire amount of the loan, causing a $400,000 loss.
As mentioned earlier, Antonucci had 20% ownership in one of the Oxygen-related entities, TSV Capital. In November 2008, TSV Capital opened an account at the Park Avenue Bank, but no money was deposited or transferred into that account. During 2008, Mr. W, who worked for Mr. X, wrote two checks against the TSV Capital Account, totaling $67,000. Antonucci had one of his employees approve the overdraft fees and pay the checks. In November 2009, the bank was forced to write off those overdraft fees, causing a $67,000 loss. At no point in time was it disclosed that Antonucci had a financial interest in TSV Capital.
Antonucci also approved a number of other overdraft fees on various Oxygen-related entities. In fact, as was disclosed in a Department of Justice Press Release, Antonucci approved “approximately $8.5 million worth of overdrafts” from 2007 to 2009 on various accounts associated with Mr. X. In exchange for this service, Antonucci was allowed to use Mr. X’s personal plane. According to witnesses, Antonucci took at least 10 flights on Mr. X’s plane, none of which Antonucci paid for. According to the complaint filed against him, Antonucci flew, among other places, to Phoenix, Arizona, to attend the Super Bowl in February 2008, to Augusta, Georgia, to watch the Masters Golf Tournament, to Florida to visit a relative, and to Panama. Again, at no time was his relationship with Mr. X disclosed.
In 2009, the Bank failed to approve some overdraft fees on some of the Oxygen-related accounts, and some checks written against those account therefore bounced. Mr. X’s administrative assistant informed Antonucci’s assistant that the free plane rides were over and that Antonucci could no longer use Mr. X’s personal plane.
Perhaps the most notorious scheme in which Antonucci engaged involved his alleged investment of $6.5 million into the Park Avenue Bank. According to the FDIC and NYSBD, banks are rated as “well-capitalized”, “adequately capitalized”, and “undercapitalized”. In August 2008, Antonucci was informed that the Bank had been downgraded from “well capitalized” to merely “adequately capitalized”. By early October 2008, the Bank had been further downgraded to “undercapitalized.” In order to appease regulators and restore the Bank’s position, Antonucci invested what he claimed to be $6.5 million of his own money into the Bank in exchange for common stock from the holding company. He did this over three separate transactions: a $2.6 million investment made on October 8, 2008; another $2.4 million investment made on October 16, 2008; and a final $1.5 million investment made on November 17, 2008. In reality, these investments were a sham. The $6.5 million was actually money from the Bank that was transferred to a variety of accounts and then reinvested into the Bank under the guise of a large personal investment from Antonucci.
On October 6, 2008, Oxygen Unlimited, one of the companies with which Mr. X was associated, drew down $2.6 million against an existing line of credit. The money was then deposited on the same day into the Oxygen Unlimited II account. Later that day, the entire amount was then transferred to the USIG account, with which Mr. X was also associated. Yet still on the same day, the entire $2.6 million was then transferred from the USIG account to a Bank of America account for Bedford Consulting Group. As mentioned earlier, Antonucci owned 100% of Bedford. On October 7, a check written for $2.6 million from Bedford Consulting Group was deposited into Antonucci’s personal checking account at the Park Avenue Bank. On October 8, Antonucci wrote a check to the Bank for $2.6 million, calling it a personal capital investment.
After making this “investment”, Antonucci wrote a letter to the FDIC asking that that Bank’s status be restored to “adequately capitalized” so that the Bank could continue to accept brokered deposits. Based on this information, the FDIC did in fact grant the waiver and allowed The Park Avenue Bank to “engage in certain brokered deposit transactions” (Velez).
On October 14, 2008, Oxygen Unlimited’s line of credit was increased to $6.4 million. On the same day, barely a week after drawing down $2.6 million, Oxygen Unlimited drew down an additional $1.6 million against this newly increased line of credit. Again, the entire amount was deposited into the Oxygen Unlimited II account. On October 15, the $1.6 million was transferred to the USIG account. Also on October 15, 2008, Antonucci approved an $800,000 loan to USIG, which was deposited into the USIG account on the same day. That brought the total transferred or deposited into the USIG account on October 15 to $2.4 million. On the same day, USIG wired $2.4 million to the Bedford Consulting Group account at Bank of America. Also on the same day, a check for $2.4 million was issued from the Bedford Consulting Group and deposited into Antonucci’s personal checking account at the Park Avenue Bank. On October 16, Antonucci wrote a check to the Bank for $2.4 million, again calling it a personal capital investment.
On November 15, 2008, Antonucci approved an additional $2.5 million in a line of credit to USIG. On November 17, USIG drew down $1.5 million from this newly extended line of credit and deposited the money into the USIG account at the Bank. On November 10, USIG wired the $1.5 million to the Bedford Consulting Group account at Bank of America, just as had previously occurred with the two prior “investments”. On November 10, a $1.5 million check was issued from Bedford and was deposited into Antonucci’s personal checking account at the Park Avenue Bank, again, just as had occurred with the two prior “investments”. On November 17, Antonucci made a final “personal capital investment” of $1.5 million to the Park Avenue Bank. This brought his total “investment” to $6.5 million.
In exchange for his “investment”, Antonucci gained 308,349 shares of Park Avenue Bancorp, Inc., the Park Avenue Bank holding company. This brought Antonucci’s common stock ownership in Park Avenue Bancorp to 316, 617 shares, from just over 1% to approximately 52% of the common stock issued and available. This in effect made him a majority shareholder.
Preet Bharara, the United States attorney for the Southern District of New York, is quoted by Weiser and Dash as saying that Antonucci’s personal capital investment “was the functional equivalent of Monopoly money.” Yet this did not stop Antonucci from trying to gain as much leverage as he could from his supposed “investment.”
On October 14, 2008, the Treasury Department announced the beginning of the Troubled Asset Relief Program (TARP). On November 14, 2008, the Park Avenue Bank applied for $11,352,480 in TAPR funds. The application was accompanied by a letter from the Bank’s outside counsel, who indicated in the letter that the Bank had managed to raise $5 million in capital by October 17, 2008, due to the capital investment by Antonucci (the additional $1.5 million was not yet “invested” at the time of the letter). In addition, according to witnesses, while the application was being reviewed, Antonucci stressed to the FDIC in multiple phone conversations that he had made a sizable personal investment, and that this investment should count favorably toward the Bank getting approved for TARP funds. And in December 2008, when the Bank sent the FDIC its proposed capital restoration plan, it noted as an important matter than Antonucci had invested $6.5 million “as part of the effort to stabilize and restore the Bank’s capital position” (Velez).
Unfortunately for Antonucci, the Bank’s financial situation continued to deteriorate while its TARP application was under review, and in February 2009, Antonucci was informed that the FDIC would not be able to recommend the Park Avenue Bank for approval of TARP funds.
The Bank subsequently withdrew its application, later indicating in a press release that the withdrawal was completely voluntary due to the Bank’s change of opinion regarding TARP funds. Antonucci is quoted in multiple sources as having said, “I don’t need TARP money, I don’t necessarily want TARP money, we are a strong bank, and management is committed to putting capital in as it is
needed.”
To add to Antonucci’s woes, in April 2009, USIG filed for bankruptcy. As was described earlier, USIG had an $800,000 loan and another $1.5 million in credit that was funneled through various accounts so that Antonucci could make his “investments”. At the time that USIG filed for bankruptcy, the entire $2.3 million balance was still outstanding. Antonucci did not want the $6.5 million scam uncovered, so he could not risk USIG defaulting on the $2.3 million outstanding – it would raise too many red flags. So another scheme was devised in order to pay off the $2.3 million that USIG owed the Park Avenue Bank.
In June 2009, PSQ, one of the Oxygen-related entities, purchased a majority of stock in General Employment Enterprise, Inc. (GEE). Mr. W became the chairman of GEE’s Board of Directors and appointed Mr. Y as CEO of GEE. Both Mr. W and Mr. Y work for Mr. X. PSQ required GEE to open an account at the Park Avenue Bank and to transfer funds into that account. On July 23, 2009, $2.3 million was transferred from the GEE account to a Park Avenue Insurance account, which was also at the Park Avenue Bank. As aforementioned, Antonucci owned Park Avenue Property and Casualty Insurance Company, which is the company with which the Park Avenue Insurance account was associated. The $2.3 million transfer was authorized by Mr. Y, who was at the time CEO of GEE.
On August 17, 2009, Antonucci used the $2.3 million to pay off USIG’s outstanding balance. In order to cover the misappropriation of GEE’s funds, Antonucci created a bogus 90-day Certificate of Deposit Receipt, which Mr. Y showed to the GEE Board of Directors when asked about the missing $2.3 million. In early October of 2009, Antonucci returned a certification of the CD, falsely indicating that the $2.3 million CD existed when in fact it did not. Numerous bank employees have verified that no 90-day, $2.3 million CD for GEE ever existed. From November 24 to December 9, 2009, $2.3 million was wired to the GEE Park Avenue account from various Oxygen-related entities, none of which had business dealing with GEE.
The final scam of which Antonucci is accused involved defrauding two Florida pastors out of $103,940. In 2009, the two Florida pastors and their congregation raised some money to start construction on a church (they currently met at a rented store front, but were hoping for something more permanent). The pastors had met with architects and contractors and were looking into financing options when they met Mr. Z. As previously mentioned, Mr. Z worked for Mr. X. Mr. Z told the pastors that he could quadruple their money by investing in discounted treasury bonds which would sell at a profit in foreign markets. Mr. Z provided fabricated “proof” that he had engaged in such transactions previously and that he worked for the Park Avenue Bank in New York. The pastors bought in to the scam and wired $103,940 to the Park Avenue Insurance account at the Park Avenue Bank on July 3, 2009. Antonucci controlled the Park Avenue Insurance account, as was previously detailed.
The pastors, of course, never saw a return on their investment, nor have they been able to reclaim any of the original investment. They called the bank, sent letters to the bank, and even visited the bank in New York in an attempt to see Antonucci, for whom they believed Mr. Z worked. It all amounted to nothing. In the five weeks following the transfer of the $103,940 into his Park Avenue Insurance account, Antonucci wrote $35,000 in checks to Mr. Z and transferred $60,000 of those funds to his personal checking account. In September 2009, Antonucci directed his assistant to book a flight for Mr. Z to Switzerland.
On October 27, 2009, Antonucci was interviewed by FDIC examiners and was specifically questioned about the source of the $6.5 million that he purportedly invested. During the interview, Antonucci was presented with a diagram that showed the movement of funds from Park Avenue Bank loan proceeds, to Oxygen Unlimited, Oxygen Unlimited II, and USIG, to the Bedford Consulting Group, and ultimately to Antonucci himself. Antonucci tried to convince the examiners that the $6.5 million came from the sale of some of the Bedford stock to Mr. W, but the numbers did not line up. On October 30, Antonucci resigned his position at the bank. On March 12, 2010, the NYSBD seized the Park Avenue Bank and appointed the FDIC as received. The FDIC sold the bank to Valley National Bank out of New Jersey, which immediately took control of operations (Weiser and Dash). On March 15, Charles J. Antonucci, Sr. was arrested at his home. He was charged with 10 counts of fraud, bribery, embezzlement, and misappropriation of funds (Wei and Bray).
In researching this case, I was struck repeatedly at how Antonucci was able to get away with so much without being caught. While it is true that he was ultimately caught, his shenanigans remained undetected for some time, and when they were brought to light, it wasn’t by the Bank or the Bank’s auditors, who were conspicuously missing from the complaint filed against Antonucci. Ironically, Antonucci was under investigation for 5 months before the claim was filed against him, and he was under investigation because the Ecuador office of the Department of Homeland Security 's U.S. Immigration and Customs Enforcement (ICE) learned of a person interested in engaging in an illegal business deal with Antonucci. The matter was turned over first to the New York ICE office, then to the El Dorado Task force, which specifically investigates financial crimes (Wei and Bray, ICE Press Release).
All in all, the counts against him read almost like fiction – that one man could have done so much in such a relatively short period of time. And the unnamed co-conspirators makes it read like a business mob story. But unfortunately, it is all true. One man, who “put his personal greed ahead of his professional duties”, helped to bring about the end of the Park Avenue Bank (Preet Bharara, as quoted in Neumeister). One man, who used fraud to obtain a controlling interest in the bank for which he worked, who tried to use fraud to obtain millions in bail-out money, who stole and lied and lied some more…I cannot but wonder if his story is truly fully told. Or will further investigations reveal even more wrong-doing at the hands of this man? And what of the mysterious Mr. X? It seems that only time will tell.
Works Cited and Referenced
Benjamin, Colin. “Wall Street: The Law is for Little People.” Black Star News, 19 Mar. 2010. Web. 7 July 2010. < http://www.blackstarnews.com/news/135/ARTICLE/ 6386/2010-03-19.html> “ICE Arrests Former Bank President Accused of Defrauding Banks, Taxpayers.” ICE, 15 Mar. 2010. Web. 7 July 2010. < http://www.ice.gov/pi/nr/1003/100315new york.htm>
“Manhattan U.S. Attorney Charges Former President of the Park Avenue Bank with Self-Dealing, Bank Bribery, Embezzlement of Bank Funds, and Fraud.” Department of Justice Press Release. New York FBI, 15 Mar. 2010. Web. 7 July 2010.
Neumeister, Larry. “Charles Antonucci: Ex-Park Avenue Bank Chief First To Be Charged With Stealing Bailout Funds.” Huffington Post, 15 Mar. 2010. Web. 7 July 2010. < http://www.huffingtonpost.com/2010/03/15/charles-antonucci-ex-park_n_499598.html>
Velez, Ricardo. “Complaint Against Charles J. Antonucci, Sr.” United States of America v. Charles J. Antonucci, Sr. Scribd, 13 Mar. 2010. Web. 7 July 2010.
Wei, Lingling, and Chad Bray. “Bank Chief Accused of TARP Fraud.” The Wall Street Journal, 16 Mar. 2010. Web. 7 July 2010. http://online.wsj.com/article/ SB10001424052748703909804575123672347495854.html
Weiser, Benjamin, and Eric Dash. “Ex-Chief of Park Avenue Bank Charged With Bailout Fraud.” The New York Times, 15 Mar. 2010. Web. 7 July 2010.
The Park Avenue Bank, so named because its headquarters were located at 460 Park Avenue in New York City, was founded in 1987. In 2004, the Bank underwent a recapitalization and restructuring that resulted in a change of management. It was at this time that Charles J. Antonucci, Sr., became the president and CEO of the Park Avenue Bank. He also assumed a place on the Bank’s Board of Directors. Antonucci was responsible for organizing a group of investors that invested more than $10 million into the Park Avenue Bank in 2004, which had four retail branches in the Manhattan and Brooklyn areas of New York City, and he apparently impressed those investors with his previous work in turning around troubled banks (Wei and Bray).
In addition to holding CEO, president, and board positions for the Park Avenue Bank, Antonucci was also involved in a number of other businesses. Antonucci was also the 100% owner of Bedford Consulting Group, Inc., Easy …show more content…
Wealth Group, Ltd., and the Park Avenue Property and Casualty Insurance Company. Additionally, he had 20% ownership in three properties in Fishkill, NY: one at 1042 Main Street, another at 2 Broad Street, and the last at 48 Jackson Street. Furthermore, Antonucci also held 20% ownership in a company called TSV Capital. All of these businesses will play roles in the schemes in which Antonucci engaged.
In short, Antonucci abused his position at the Park Avenue Bank by engaging in at least eight different schemes involving fraud and/or misuse of company funds. In a majority of these schemes, he had help in the form of co-conspirators, none of whose identities have been revealed at this point. The main co-conspirator will be referred to as Mr. X throughout this paper. Although it is unknown how many people work for him, at least three of Mr. X’s employees and/or associates also conspired with Antonucci. Those three are referred to as Mr. W, Mr. Y, and Mr. Z.
Mr. X became a client of the Park Avenue Bank in 2007, and he brought with him a number of different businesses, each one of which required a separate account at the Bank. In the complaint against Antonucci, those businesses are referred to as the “Oxygen-related entities” and include the following companies: Oxygen Unlimited, LLC; Oxygen Unlimited II, LLC; O2HR; PSQ, LLC; River Falls Financial Services; SDH Realty, Inc.; and TSV Capital, LLC. As was noted above, Antonucci had 20% ownership of TSV Capital. As with the businesses that Antonucci owned, many of the Oxygen-related entities figured into the scams that Antonucci and his co-conspirators carried out. One additional company that played a key role was the US Insurance Group, or USIG. USIG also had an account at the Bank, and Oxygen Unlimited had a 25% put option on USIG, which suggests that Mr. X had a hand in USIG as well. Furthermore, Mr. X’s administrative assistant was an account signer on all of the Oxygen-related entities as well as on the USIG account.
As aforementioned, Antonucci was involved in at least eight different schemes in his time at the Park Avenue Bank. One of these involved the leasing and maintenance of the three properties in Fishkill, NY, in which he had partial ownership. Beginning sometime in 2005, the Park Avenue Bank began leasing the house at 1042 Main Street. The first floor of the house was reserved for the Bedford Consulting Group, which was owned by Antonucci, and the second floor was used as an office by Bank employees. Additionally, the Bank paid approximately $750,000 to have a storage center built behind the house to accommodate the Bank’s information technology recovery equipment. The Park Avenue Bank also entered into lease agreements in 2008 for both the property at 2 Broad Street and at 48 Jackson Street. Although Antonucci indicated that both properties would be used as storage/disaster recovery sites by the Bank, as of 2010, the Bank had yet to use either property in any way. However, despite using only one of the three properties, the Bank paid out more than $1 million in rent and other expenses to these three properties. At no time was it disclosed that Antonucci had part ownership of any of these buildings.
Another scheme involves another one of the companies that Antonucci owned - Easy Wealth Group, Ltd. In early 2006, Antonucci approached one of his associates with a “business opportunity”: Easy Wealth was losing money, and Antonucci was hoping to recoup his investment. He therefore asked his associate to “take over” the business, promising that the Park Avenue Bank would provide financing. Antonucci helped his associate prepare the necessary loan paperwork, making it appear that the associate had owned Easy Wealth since 2004 and omitting any connection with Antonucci. He also helped to create false documents for the application, including a falsified profit and loss statement for Easy Wealth’s 2005 fiscal year, and false personal financial statements for his associate. Based on the falsified application, the Bank approved a loan of $300,000 to Easy Wealth. At no time was Antonucci’s ownership or and financial interest in Easy Money disclosed. In fact, Antonucci himself personally approved the $300,000 loan.
Shortly after his associate was approved for the loan, Antonucci asked his associate for $70,000 in two interest-free “loans”. Both times, the associate made checks payable to Bedford Consulting Group. Antonucci finally repaid some of the money in 2008, but never repaid $20,000 of the “loan” nor any of the interest that the associate had to pay on the money.
Between May 2006 and June 2009, Antonucci incrementally approved credit increases to Easy Wealth from the original $300,000 to $400,000. He also twice extended the loan due date by a year (for a total of two years), and then in April 2009 extended the due date by another 90 days. In June 2009, Easy Wealth ceased to operate and Antonucci’s associate filed for bankruptcy. At that time, Easy Wealth still owed the Bank the entire $400,000 balance. The Bank therefore had to write off the entire amount of the loan, causing a $400,000 loss.
As mentioned earlier, Antonucci had 20% ownership in one of the Oxygen-related entities, TSV Capital. In November 2008, TSV Capital opened an account at the Park Avenue Bank, but no money was deposited or transferred into that account. During 2008, Mr. W, who worked for Mr. X, wrote two checks against the TSV Capital Account, totaling $67,000. Antonucci had one of his employees approve the overdraft fees and pay the checks. In November 2009, the bank was forced to write off those overdraft fees, causing a $67,000 loss. At no point in time was it disclosed that Antonucci had a financial interest in TSV Capital.
Antonucci also approved a number of other overdraft fees on various Oxygen-related entities. In fact, as was disclosed in a Department of Justice Press Release, Antonucci approved “approximately $8.5 million worth of overdrafts” from 2007 to 2009 on various accounts associated with Mr. X. In exchange for this service, Antonucci was allowed to use Mr. X’s personal plane. According to witnesses, Antonucci took at least 10 flights on Mr. X’s plane, none of which Antonucci paid for. According to the complaint filed against him, Antonucci flew, among other places, to Phoenix, Arizona, to attend the Super Bowl in February 2008, to Augusta, Georgia, to watch the Masters Golf Tournament, to Florida to visit a relative, and to Panama. Again, at no time was his relationship with Mr. X disclosed.
In 2009, the Bank failed to approve some overdraft fees on some of the Oxygen-related accounts, and some checks written against those account therefore bounced. Mr. X’s administrative assistant informed Antonucci’s assistant that the free plane rides were over and that Antonucci could no longer use Mr. X’s personal plane.
Perhaps the most notorious scheme in which Antonucci engaged involved his alleged investment of $6.5 million into the Park Avenue Bank. According to the FDIC and NYSBD, banks are rated as “well-capitalized”, “adequately capitalized”, and “undercapitalized”. In August 2008, Antonucci was informed that the Bank had been downgraded from “well capitalized” to merely “adequately capitalized”. By early October 2008, the Bank had been further downgraded to “undercapitalized.” In order to appease regulators and restore the Bank’s position, Antonucci invested what he claimed to be $6.5 million of his own money into the Bank in exchange for common stock from the holding company. He did this over three separate transactions: a $2.6 million investment made on October 8, 2008; another $2.4 million investment made on October 16, 2008; and a final $1.5 million investment made on November 17, 2008. In reality, these investments were a sham. The $6.5 million was actually money from the Bank that was transferred to a variety of accounts and then reinvested into the Bank under the guise of a large personal investment from Antonucci.
On October 6, 2008, Oxygen Unlimited, one of the companies with which Mr. X was associated, drew down $2.6 million against an existing line of credit. The money was then deposited on the same day into the Oxygen Unlimited II account. Later that day, the entire amount was then transferred to the USIG account, with which Mr. X was also associated. Yet still on the same day, the entire $2.6 million was then transferred from the USIG account to a Bank of America account for Bedford Consulting Group. As mentioned earlier, Antonucci owned 100% of Bedford. On October 7, a check written for $2.6 million from Bedford Consulting Group was deposited into Antonucci’s personal checking account at the Park Avenue Bank. On October 8, Antonucci wrote a check to the Bank for $2.6 million, calling it a personal capital investment.
After making this “investment”, Antonucci wrote a letter to the FDIC asking that that Bank’s status be restored to “adequately capitalized” so that the Bank could continue to accept brokered deposits. Based on this information, the FDIC did in fact grant the waiver and allowed The Park Avenue Bank to “engage in certain brokered deposit transactions” (Velez).
On October 14, 2008, Oxygen Unlimited’s line of credit was increased to $6.4 million. On the same day, barely a week after drawing down $2.6 million, Oxygen Unlimited drew down an additional $1.6 million against this newly increased line of credit. Again, the entire amount was deposited into the Oxygen Unlimited II account. On October 15, the $1.6 million was transferred to the USIG account. Also on October 15, 2008, Antonucci approved an $800,000 loan to USIG, which was deposited into the USIG account on the same day. That brought the total transferred or deposited into the USIG account on October 15 to $2.4 million. On the same day, USIG wired $2.4 million to the Bedford Consulting Group account at Bank of America. Also on the same day, a check for $2.4 million was issued from the Bedford Consulting Group and deposited into Antonucci’s personal checking account at the Park Avenue Bank. On October 16, Antonucci wrote a check to the Bank for $2.4 million, again calling it a personal capital investment.
On November 15, 2008, Antonucci approved an additional $2.5 million in a line of credit to USIG. On November 17, USIG drew down $1.5 million from this newly extended line of credit and deposited the money into the USIG account at the Bank. On November 10, USIG wired the $1.5 million to the Bedford Consulting Group account at Bank of America, just as had previously occurred with the two prior “investments”. On November 10, a $1.5 million check was issued from Bedford and was deposited into Antonucci’s personal checking account at the Park Avenue Bank, again, just as had occurred with the two prior “investments”. On November 17, Antonucci made a final “personal capital investment” of $1.5 million to the Park Avenue Bank. This brought his total “investment” to $6.5 million.
In exchange for his “investment”, Antonucci gained 308,349 shares of Park Avenue Bancorp, Inc., the Park Avenue Bank holding company. This brought Antonucci’s common stock ownership in Park Avenue Bancorp to 316, 617 shares, from just over 1% to approximately 52% of the common stock issued and available. This in effect made him a majority shareholder.
Preet Bharara, the United States attorney for the Southern District of New York, is quoted by Weiser and Dash as saying that Antonucci’s personal capital investment “was the functional equivalent of Monopoly money.” Yet this did not stop Antonucci from trying to gain as much leverage as he could from his supposed “investment.”
On October 14, 2008, the Treasury Department announced the beginning of the Troubled Asset Relief Program (TARP). On November 14, 2008, the Park Avenue Bank applied for $11,352,480 in TAPR funds. The application was accompanied by a letter from the Bank’s outside counsel, who indicated in the letter that the Bank had managed to raise $5 million in capital by October 17, 2008, due to the capital investment by Antonucci (the additional $1.5 million was not yet “invested” at the time of the letter). In addition, according to witnesses, while the application was being reviewed, Antonucci stressed to the FDIC in multiple phone conversations that he had made a sizable personal investment, and that this investment should count favorably toward the Bank getting approved for TARP funds. And in December 2008, when the Bank sent the FDIC its proposed capital restoration plan, it noted as an important matter than Antonucci had invested $6.5 million “as part of the effort to stabilize and restore the Bank’s capital position” (Velez).
Unfortunately for Antonucci, the Bank’s financial situation continued to deteriorate while its TARP application was under review, and in February 2009, Antonucci was informed that the FDIC would not be able to recommend the Park Avenue Bank for approval of TARP funds.
The Bank subsequently withdrew its application, later indicating in a press release that the withdrawal was completely voluntary due to the Bank’s change of opinion regarding TARP funds. Antonucci is quoted in multiple sources as having said, “I don’t need TARP money, I don’t necessarily want TARP money, we are a strong bank, and management is committed to putting capital in as it is
needed.”
To add to Antonucci’s woes, in April 2009, USIG filed for bankruptcy. As was described earlier, USIG had an $800,000 loan and another $1.5 million in credit that was funneled through various accounts so that Antonucci could make his “investments”. At the time that USIG filed for bankruptcy, the entire $2.3 million balance was still outstanding. Antonucci did not want the $6.5 million scam uncovered, so he could not risk USIG defaulting on the $2.3 million outstanding – it would raise too many red flags. So another scheme was devised in order to pay off the $2.3 million that USIG owed the Park Avenue Bank.
In June 2009, PSQ, one of the Oxygen-related entities, purchased a majority of stock in General Employment Enterprise, Inc. (GEE). Mr. W became the chairman of GEE’s Board of Directors and appointed Mr. Y as CEO of GEE. Both Mr. W and Mr. Y work for Mr. X. PSQ required GEE to open an account at the Park Avenue Bank and to transfer funds into that account. On July 23, 2009, $2.3 million was transferred from the GEE account to a Park Avenue Insurance account, which was also at the Park Avenue Bank. As aforementioned, Antonucci owned Park Avenue Property and Casualty Insurance Company, which is the company with which the Park Avenue Insurance account was associated. The $2.3 million transfer was authorized by Mr. Y, who was at the time CEO of GEE.
On August 17, 2009, Antonucci used the $2.3 million to pay off USIG’s outstanding balance. In order to cover the misappropriation of GEE’s funds, Antonucci created a bogus 90-day Certificate of Deposit Receipt, which Mr. Y showed to the GEE Board of Directors when asked about the missing $2.3 million. In early October of 2009, Antonucci returned a certification of the CD, falsely indicating that the $2.3 million CD existed when in fact it did not. Numerous bank employees have verified that no 90-day, $2.3 million CD for GEE ever existed. From November 24 to December 9, 2009, $2.3 million was wired to the GEE Park Avenue account from various Oxygen-related entities, none of which had business dealing with GEE.
The final scam of which Antonucci is accused involved defrauding two Florida pastors out of $103,940. In 2009, the two Florida pastors and their congregation raised some money to start construction on a church (they currently met at a rented store front, but were hoping for something more permanent). The pastors had met with architects and contractors and were looking into financing options when they met Mr. Z. As previously mentioned, Mr. Z worked for Mr. X. Mr. Z told the pastors that he could quadruple their money by investing in discounted treasury bonds which would sell at a profit in foreign markets. Mr. Z provided fabricated “proof” that he had engaged in such transactions previously and that he worked for the Park Avenue Bank in New York. The pastors bought in to the scam and wired $103,940 to the Park Avenue Insurance account at the Park Avenue Bank on July 3, 2009. Antonucci controlled the Park Avenue Insurance account, as was previously detailed.
The pastors, of course, never saw a return on their investment, nor have they been able to reclaim any of the original investment. They called the bank, sent letters to the bank, and even visited the bank in New York in an attempt to see Antonucci, for whom they believed Mr. Z worked. It all amounted to nothing. In the five weeks following the transfer of the $103,940 into his Park Avenue Insurance account, Antonucci wrote $35,000 in checks to Mr. Z and transferred $60,000 of those funds to his personal checking account. In September 2009, Antonucci directed his assistant to book a flight for Mr. Z to Switzerland.
On October 27, 2009, Antonucci was interviewed by FDIC examiners and was specifically questioned about the source of the $6.5 million that he purportedly invested. During the interview, Antonucci was presented with a diagram that showed the movement of funds from Park Avenue Bank loan proceeds, to Oxygen Unlimited, Oxygen Unlimited II, and USIG, to the Bedford Consulting Group, and ultimately to Antonucci himself. Antonucci tried to convince the examiners that the $6.5 million came from the sale of some of the Bedford stock to Mr. W, but the numbers did not line up. On October 30, Antonucci resigned his position at the bank. On March 12, 2010, the NYSBD seized the Park Avenue Bank and appointed the FDIC as received. The FDIC sold the bank to Valley National Bank out of New Jersey, which immediately took control of operations (Weiser and Dash). On March 15, Charles J. Antonucci, Sr. was arrested at his home. He was charged with 10 counts of fraud, bribery, embezzlement, and misappropriation of funds (Wei and Bray).
In researching this case, I was struck repeatedly at how Antonucci was able to get away with so much without being caught. While it is true that he was ultimately caught, his shenanigans remained undetected for some time, and when they were brought to light, it wasn’t by the Bank or the Bank’s auditors, who were conspicuously missing from the complaint filed against Antonucci. Ironically, Antonucci was under investigation for 5 months before the claim was filed against him, and he was under investigation because the Ecuador office of the Department of Homeland Security 's U.S. Immigration and Customs Enforcement (ICE) learned of a person interested in engaging in an illegal business deal with Antonucci. The matter was turned over first to the New York ICE office, then to the El Dorado Task force, which specifically investigates financial crimes (Wei and Bray, ICE Press Release).
All in all, the counts against him read almost like fiction – that one man could have done so much in such a relatively short period of time. And the unnamed co-conspirators makes it read like a business mob story. But unfortunately, it is all true. One man, who “put his personal greed ahead of his professional duties”, helped to bring about the end of the Park Avenue Bank (Preet Bharara, as quoted in Neumeister). One man, who used fraud to obtain a controlling interest in the bank for which he worked, who tried to use fraud to obtain millions in bail-out money, who stole and lied and lied some more…I cannot but wonder if his story is truly fully told. Or will further investigations reveal even more wrong-doing at the hands of this man? And what of the mysterious Mr. X? It seems that only time will tell.
Works Cited and Referenced
Benjamin, Colin. “Wall Street: The Law is for Little People.” Black Star News, 19 Mar. 2010. Web. 7 July 2010. < http://www.blackstarnews.com/news/135/ARTICLE/ 6386/2010-03-19.html> “ICE Arrests Former Bank President Accused of Defrauding Banks, Taxpayers.” ICE, 15 Mar. 2010. Web. 7 July 2010. < http://www.ice.gov/pi/nr/1003/100315new york.htm>
“Manhattan U.S. Attorney Charges Former President of the Park Avenue Bank with Self-Dealing, Bank Bribery, Embezzlement of Bank Funds, and Fraud.” Department of Justice Press Release. New York FBI, 15 Mar. 2010. Web. 7 July 2010.
Neumeister, Larry. “Charles Antonucci: Ex-Park Avenue Bank Chief First To Be Charged With Stealing Bailout Funds.” Huffington Post, 15 Mar. 2010. Web. 7 July 2010. < http://www.huffingtonpost.com/2010/03/15/charles-antonucci-ex-park_n_499598.html>
Velez, Ricardo. “Complaint Against Charles J. Antonucci, Sr.” United States of America v. Charles J. Antonucci, Sr. Scribd, 13 Mar. 2010. Web. 7 July 2010.
Wei, Lingling, and Chad Bray. “Bank Chief Accused of TARP Fraud.” The Wall Street Journal, 16 Mar. 2010. Web. 7 July 2010. http://online.wsj.com/article/ SB10001424052748703909804575123672347495854.html
Weiser, Benjamin, and Eric Dash. “Ex-Chief of Park Avenue Bank Charged With Bailout Fraud.” The New York Times, 15 Mar. 2010. Web. 7 July 2010.