One of the board members of a failed bank will spend a five years in jail after being convicted of defrauding the government’s Troubled Asset Relief Program out of nearly $7 million.
According to the Special Inspector General for the Troubled Asset Relief Program, Zulfikar Esmail, 73, pleaded guilty to one count of financial institution fraud of more than $100,000 and an amended count of theft from TARP of more than $100,000.
Additionally, Shamim Esmail, 68, pleaded guilty to the same counts.
For his crimes, Zulfikar Esmail will spend the next five years in the Illinois Department of Corrections, while Shamim Esmail received a sentence of 24 months of probation and 250 hours of community service.
According to SIGTARP, the case against the Esmails stemmed from a scheme to defraud TARP of $6.8 million.
The Esmails were board members at the Wilmette, Illinois-based Premier Bank, which failed in 2012.
“The Esmails hid the poor financial condition of the bank from state regulators from 2006 until the bank’s failure March 23, 2012, costing the Federal Deposit Insurance Corp. $64.1 million,” SIGTARP said.
During that time period, the bank’s 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, 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,” SIGTARP said.
For Zulfikar Esmail, this isn’t the first time he’s been convicted of a crime. He was previously convicted of loan fraud of an $8.1 million loan from First Midwest Bank in 2009, SIGTARP said.
“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 Christy Goldsmith Romero of SIGTARP.
“Taxpayers did not fund TARP so that fraudulent bankers like the Esmails could fund fraud in the bank,” Goldsmith Romero added.
“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,” Goldsmith Romero added. “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.”
According to SIGTARP, the Special Prosecutions Bureau of the Illinois Attorney General’s office handled the Esmails prosecution.
“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.”
