Qui Tam

Bank CEO's Alleged TARP Fraud Results in First Reported Criminal Charges For Misuse of TARP Funds

By Finch McCranie, Esq.

We have written previously about how the "Troubled Asset Relief Program" (TARP) that began with the financial meltdown in 2008 would undoubtedly beget fraud that may be actionable under the False Claims Act. The qui tam provisions of the False Claims Act, the country's major whistleblower law, allow whistleblowers ("relators") who report fraud or false claims to share in the government's recovery of damages.

Yesterday, the first TARP fraud criminal charges appeared. Federal prosecutors in New York's Southern District announced the arrest of Charles J. Anonucci, Sr., former President and Chief Executive Officer of The Park Avenue Bank.

The criminal complaint filed on March 13, as summarized by prosecutors, alleges "self-dealing, bank bribery, embezzlement of bank funds, and fraud, among others. ANTONUCCI also was alleged to have attempted to fraudulently obtain more than $11 million worth of taxpayer rescue funds from the Troubled Asset Relief Program, or TARP. ANTONUCCI is the first defendant ever charged with attempting to defraud TARP. Additionally, ANTONUCCI was alleged to have used The Park Avenue Bank in a scheme to defraud two pastors of a Florida congregation out of more than $100,000 set aside to build a new church."

Antonucci likely will not be the last former bank executive to have to surrender his passport and post bond. But for the dearth of restrictions on use of TARP funds--which has provoked outrage as TARP recipients paid large bonuses--more TARP cases would have appeared by now. (We received many calls from potential TARP whistleblowers interested in bringing cases under the False Claims Act).

Nonetheless, more traditional types of fraud undoubtedly will surface in the TARP program, especially as more TARP whistleblowers come forward. With the billions used to fund TARP, those TARP whistleblowers may be motivated by the prospect of receiving 15-25% of money that the government recovers when the whistleblowers use the qui tam provisions of the False Claims Act to pursue TARP fraud.

The government's full announcement is reprinted below.

Full post as published by Whistleblower Lawyer Blog on March 16, 2010 (boomark / email).