“This represents one of the largest fraud schemes in recent years," said U.S. Attorney Hochul. “A multi-million dollar fraud scheme such as this has the potential to harm more than just the immediate victim of the crime. It also affects the greater community. In this case, thanks to the actions of both the bank and law enforcement, this defendant will not be in a position to commit further crimes in the foreseeable future."
Assistant U.S. Attorney Trini Ross, who is handling the case, stated that between 2008 and November 2013, Whipple, an M&T Bank Vice President, devised a scheme to defraud the bank involving creation and origination of fraudulent “funding loans." These loans were created in the names of entities which were credit worthy, or made by the defendant to appear credit worthy. The proceeds were then given to entities of Whipple’s choosing.
As part of the scheme, Whipple forged signatures on loan documentation related to the origination of many of the “funding loans" and had mail diverted to locations other than the credit worthy clients’ addresses to avoid detection. When customers questioned the defendant regarding irregularities in their loan accounts, Whipple told them it was a mistake or a bank error and promised to correct the problem. These problems were never corrected as the defendant stated they would be and he subsequently covered the irregularities up through the creation of new funding loans.
In addition, the defendant caused official checks drawn on M&T Bank to be created to fund the fraudulently originated loans. The proceeds of the fraudulent loans were used to make payments on the fraudulent loans in order to avoid detection by M&T Bank and the customer whose credit was utilized for funding and to divert funds to other business banking customers who likely would not have credit qualified for funding.
At the time the scheme was discovered, there were at least 12 funding loans fraudulently created by Whipple. As a result of the defendant’s actions, M&T Bank suffered a loss of $5,332,397.
The plea is the result of an investigation by Special Agents of the Federal Bureau of Investigation and Special Agents of the Internal Revenue Service, Criminal Investigation Division, under the direction of Shantelle P. Kitchen, Special Agent in Charge, New York Field Office.
Sentencing is scheduled for October 7, 2015 at 10:00 a.m. before Judge Wolford.
Source: U.S. Department of Justice, Office of the United States Attorneys
