Zulfikar Esmail, 73, pleaded guilty to financial institution fraud of more than $100,000 and a count of theft from TARP of more than $100,000, and was sentenced to five years in Illinois state prison. Shamim Esmail, 68, pleaded guilty to the same counts and was sentenced to 24 months of probation and 250 hours of community service.
According to the office of the SIGTARP, the case stemmed from a scheme by the Esmails to defraud TARP of $6.8 million. The Esmails hid Premier Bank’s poor financial condition from regulatort from 2006 until the bank failed in 2012, costing the FDIC more than $64 million.
“During that time, 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,” a SIGTARP news release said.
To hide the bank’s true condition, money from third parties was used to make payments on several loans that were past due.
“Today two TARP bankers were convicted of a six year massive fraud that contributed to a TARP bank failing and a TARP loss of $7 million,” said SIGTARP Christy Goldsmith Romero. “Taxpayers did not fund TARP so that fraudulent bankers like the Esmails could fund fraud in the bank. SIGTARP and the Illinois Attorney General’s office joined forces to bring accountability to Zufikar Esmail, who ran this bank without any regard for the law and has now been sentenced to prison. He cooked the books and left many victims in the wake of his deception, including borrowers ensnared into his conspiracy, regulators who were lied to, and taxpayers who lost bailout funds.”
““This couple fraudulently secured TARP Funds at a time when the country’s economy and its major financial institutions were on the brink of disaster,” Illinois Attorney General Lisa Madigan said. “Their illegal scheme ultimately resulted in the failure of a bank at a great cost to the bank’s customers and American taxpayers.”
Two former board members of Premier Bank have pleaded guilty and been sentenced for defrauding the Troubled Asset Relief Program, the Treasury’s Community Development Financial Institutions Fund and state and federal banking regulators, according to a report from TARP’s special inspector general.