Defense attorneys: No evidence of criminal guilt in Wilmington Trust case

In closing arguments on Monday, U.S. prosecutors said Wilmington Trust executives criminally hid from regulators the bank’s practice of waiving delinquent loans – an act that contributed to the 2011 downfall of the once iconic bank, they said.

On Tuesday morning, attorneys for two of the four defendants had their chance at a rebuttal, showing jurors bank emails sent to auditors and financial reports to the Federal Reserve that discussed the loan waivers, as well as a bank decision in 2009 to extend en masse scores of matured commercial real estate loans.

"Bob’s being charged with potentially defrauding the Federal Reserve and his boss is on the Federal Reserve,” said Michael Kelly, attorney for Former bank President Robert Harra Jr.

Kelly in the statement was referencing former Wilmington Trust CEO Ted Cecala, who also held a position on the board of the Philadelphia Federal Reserve. 

“Ted was on the Fed,” Kelly said. 

In a 2015 indictment, prosecutors claim four former bank executives hid from regulators hundreds of millions of dollars’ worth of commercial real estate loans to Delaware developers during the height of the Great Recession.

M&T Bank purchased Wilmington Trust's name and assets at a deep discount in 2011 after investors learned the true value of the bank's commercial real estate portfolio.

In addition to Harra, former Chief Financial Officer David Gibson, former Chief Credit Officer William North and former Controller Kevyn Rakowski face charges of fraud, conspiracy and making false statements to federal regulators.

Yet defense attorneys says there is no evidence of such a crime.

Before its demise, Wilmington Trust was “a relationship bank,” with employees not unlike George Bailey from the movie, “It’s a Wonderful Life,” Kelly told jurors on Tuesday.

He also recited a litany of questions to jurors that he said should sow doubt in their minds. The burden of proof is high in a criminal case, unlike a civil lawsuit, he said, and it hasn’t been met.

“Did the government even prove that these four even met to talk about this conspiracy? “Did the government prove that these four were even aware?” “Ever see a conspiracy where 70 people inside the bank are copied?” Who carries out a conspiracy for 28 years in plain sight?”

Following Kelly, Gibson's attorney Kenneth Breen said delinquent loan waivers not only were in “plain view” to regulators and auditors, but those individuals were “part of the discussion.”

“No one’s hiding this issue,” Breen said.

Former U.S. Attorney and former Delaware Attorney general Charles Oberly watched from the rear of the courtroom as Breen made his arguments.

Attorneys for Rakowski and North will make closing arguments on Tuesday afternoon

Prosecutors will have an opportunity to address jurors once more in a rebuttal argument before jurors deliberate.

Contact Karl Baker at kbaker@delawareonline.com or (302) 324-2329. Follow him on Twitter @kbaker6.