 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."
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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]
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