 Defendants Zulfikar Esmail, Shamim Esmail, Robert McCarty and William
Brannin were formally arraigned Tuesday in Cook County Criminal
Court on a multi-count indictment for their roles in the alleged
scheme at Premier Bank in Wilmette, which failed more than a year
ago.
The defendants are charged for their alleged roles in a
long-running fraud scheme that defrauded the U.S. Treasury
Department of $6.8 million from the Troubled Asset Relief Program
and cost the FDIC $64.1 million when the bank failed on March 23,
2012.
The indictment alleged that from 2006 until the bank's failure,
the defendants hid the poor financial condition of the bank from
state regulators. The indictment alleged that Zulfikar Esmail
engaged in a criminal shakedown scheme, soliciting and demanding
bribes in connection with applications made for business loans and
lines of credit to open and operate several Michael's Fresh Market
grocery stores in Naperville, Downers Grove and Chicago's Hyde Park
neighborhood. The indictment alleged that Esmail demanded his
children be given ownership stakes in the stores in exchange for
loans and lines of credit.
The attorney general also alleged that Zulfikar Esmail ordered
construction and improvement work done on his Evanston home and
rental properties he owned, including the construction of an
underground tunnel on the property of his home. The indictment
alleges Esmail directed the contractor to prepare invoices that
fraudulently showed the work was done at the bank in order to bill
the bank for the work.
"The perpetrators of this criminal enterprise are charged with
using taxpayer funds to further their own shakedown scheme at time
when our country was on the brink of disaster," Madigan said. "Their
brazen actions to cover up this fraudulent scheme led to the failure
of Premier Bank at the expense of its trusting customers and
American taxpayers."
The indictment alleged that over the six-year period, the bank
officers submitted numerous fraudulent reports to the Illinois
Department of Financial and Professional Regulation, misrepresenting
the financial condition of the bank's numerous loans and lines of
credit. To cover up the true condition of the bank, the indictment
alleged money from third parties was used to make payments on
several loans that were past due, including payments from a limited
liability corporation owned in part by Zulfikar Esmail's children.
By late 2008, when authorities allege the bank was nearing
failure, the bank applied for and received the first of two payments
from the Troubled Asset Relief Program, ultimately receiving a total
of $6.8 million in taxpayer dollars, in order to further the
criminal scheme.
"On July 10, 2013, SIGTARP federal agents participated in the
arrest of the individuals charged (Tuesday), which represents the
first criminal enterprise charges brought against officers and
directors of a TARP bank," said Christy Romero, of SIGTARP, the
special inspector general for the Troubled Asset Relief Program. "Esmail,
the former chairman of TARP recipient Premier Bank, stands charged
of orchestrating a criminal enterprise by using Premier Bank as his
personal fiefdom and of exploiting TARP to finance an alleged
long-running criminal enterprise while fattening his own pockets at
the expense of customers and federal taxpayers. Esmail, his wife who
was a senior officer and general counsel of the bank, and two bank
directors are charged with a massive bank fraud conspiracy that hid
the true financial condition of the bank. They are also charged with
theft by deception for using allegedly fraudulent bank records to
get $6.8 million in TARP bailout funds from Treasury, all of which
was lost when the bank collapsed under the weight of this alleged
fraud. SIGTARP and our law enforcement partners will aggressively
investigate allegations of TARP fraud and ensure that TARP funds are
used for their intended purpose, not to fund criminal activity."
[to top of second column] |
The bank's failure in 2012 resulted in a loss to the FDIC of $64.1
million.
"We are pleased to join our law enforcement colleagues in
announcing (Tuesday's) charges. The FDIC Office of Inspector General
is committed to investigating and prosecuting cases where trusted
insiders abuse their positions and engage in activities that harm
their institutions," said John Lucas, special agent in charge of the
Office of Investigations for the FDIC Office of the Inspector
General. "The alleged fraud in this case contributed to Premier
Bank's failure and corresponding losses to the Deposit Insurance
Fund. We will continue to pursue such threats to the safety and
soundness of FDIC-insured institutions throughout the country."
The defendants were arrested at their homes on July 10 and
appeared in court Tuesday to formally face charges.
Zulfikar Esmail, 70, of Evanston, was charged for financial
institution fraud, organizing a financial crimes enterprise,
continuing a financial crimes enterprise, theft by deception,
commercial bribery of a financial institution and conspiracy to
commit a financial crime. He faces a mandatory prison sentence for
the Class X felony charges of theft by deception and organizing a
financial crimes enterprise, which each carry a mandatory prison
sentence of six to 30 years. The remaining charges are Class 1
felonies punishable by four to 15 years in prison.
The three other defendants -- Shamim Esmail, 65, of Evanston;
Robert McCarty, 51, of Geneva; and William Brannin, 53, of Chicago
-- were charged with financial institution fraud, continuing a
financial crimes enterprise and conspiracy to commit a financial
crime, each a Class 1 felony punishable by four to 15 years in
prison. The three defendants additionally face the charge of theft
by deception, a Class X felony with a mandatory prison sentence of
six to 30 years.
Zulfikar and Shamim Esmail have been released on a collective
$850,000 bond. McCarty was released on a $400,000 bond, and Brannin
was released on a $350,000 bond.
The public is reminded that the defendants are presumed innocent
until proven guilty in a court of law.
This case was investigated by the Office of the Special Inspector
General for TARP and the Office of the Inspector General of the
FDIC. Bureau Chief Edward Carter and Assistant Attorneys General
Edward Snow and Anshuman Vaidya are handling prosecution of the case
for Madigan's Special Prosecutions Bureau.
[Text from file received from the office
of
Illinois Attorney General Lisa
Madigan]
 |
