- Associated Press - Thursday, July 7, 2016

WILMINGTON, Del. (AP) - A federal judge said Thursday that he likely will dismiss several criminal charges in a fraud and conspiracy case against Wilmington Trust and four of its former top executives, although prosecutors likely will try to reinstate the charges.

Former bank President Robert V.A. Harra Jr., former Chief Financial Officer David Gibson, former Chief Credit Officer William North and former controller Kevyn Rakowski are charged with fraud, conspiracy and making false statements to federal regulators.

Prosecutors also allege that Wilmington Trust, through its executives, concealed the truth about its deteriorating commercial real estate loan portfolio before the bank’s collapse and hasty acquisition by M&T; Bank Corp. in 2011.

U.S. District Court Judge Richard Andrews heard arguments Thursday on a host of defense motions to dismiss several charges. While rejecting most of the motions, Andrews said several counts alleging false statements to the Securities and Exchange Commission and Federal Reserve would likely be dismissed because the specific wording in the charges differs from the federal criminal code.

Prosecutors alleged, for example, that defendants acted “unlawfully and knowingly” in making false statements, while the code refers to actions done “knowingly and willfully.”

“I don’t think I have any choice but to dismiss those counts,” said Andrews, who agreed to defer ruling until he reads previous rulings cited by prosecutor Jamie McCall, who argued that an indictment should be considered valid if a particular element is found elsewhere in the document.

“There is no magic word that needs to be used,” McCall said.

Andrews indicated that he also may dismiss three counts alleging that Gibson “filed” false certifications that the bank’s financial statements fairly represented its financial condition and complied with the Securities Exchange Act.

“He didn’t file anything,” said John Nowak, an attorney for Gibson, pointing to the statutory language. “It doesn’t allege a crime as stated.”

In the indictment, prosecutors say Gibson “electronically signed” certifications regarding the bank’s SEC reports.

The judge also said he likely would reject Wilmington Trust’s request for information about members of the grand jury that returned the indictment. Wilmington Trust claims that one or more of the grand jurors may have been biased because it’s possible that they or their close relatives or friends were either Wilmington Trust shareholders or former employees. Andrews said the bank’s argument was “speculative.”

Prosecutors claim Wilmington Trust failed to disclose to regulators its practice of “waiving” matured loans designated as current for interest and in the process of being extended from the reporting requirements for past due loans. The indictment cites several emails, dating as far back 2007, in which North expressed concerns about the amount of loans being waived from the reporting requirements.

According to the indictment, Wilmington Trust officials reported only $10.8 million in commercial loans 90 days or more past due at the end of 2009, concealing more than $333 million in past due loans subject to the waiver practice.

In addition to the criminal investigation, which has resulted in several guilty pleas from former bank officials, several former Wilmington Trust shareholders have filed a federal class-action securities lawsuit.

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