Former Orion Bank President Jerry Williams pleaded guilty to conspiracy and fraud charges Friday, detailing for the first time in public how his illegal activities to save the once-successful community bank ultimately caused it to fail.
Williams, 52, told U.S. Magistrate Judge Douglas Frazier that he and bank executives Angel Guerzon and Thomas Hebble concocted a plan to illegally increase the bank’s assets by adding a $15 million infusion from Francesco Mileto, a borrower who played a key role in the conspiracy.
“In the long term, I was hoping to save the bank,” Williams told the magistrate during the first of two hearings to determine whether his plea agreement is accepted. “In doing that … I harmed the bank in the short term.”
Williams, who looked like a bank executive in a black suit and white shirt, admitted the loan was improper.
“I closed my eyes to save the institution during a difficult time economically and I shouldn’t have done that,” Williams said as he stood with his defense attorneys.
Before the half-hour hearing, Williams bopped Patrick Miller, Orion’s former senior vice president, on the head as he walked in, surprising Miller. As the hearing ended, Miller smiled in satisfaction, whispering, “We finally heard him say it.”
Outside the courthouse, he said he was pleased Williams admitted the fraud that caused so many to lose their life savings.
“I have nothing to say to that man,” he said. “I’ll say it all at sentencing.”
Over 32 years, Naples-based Orion became one of the nation’s most successful community banks, growing to 23 branches and racking up awards for Williams, a former Banker of the Year. Regulators shut the bank down in November 2009, days after his ouster.
It cost the Federal Deposit Insurance Corporation more than $593 million, about 22 percent of the bank’s $2.7 billion in assets.
His co-conspirators are in federal prison and Hebble and Guerzon must jointly pay about $33.5 million in restitution to the FDIC, while Mileto owes $65.2 million.
Williams, who also was the bank’s chief executive officer, pleaded guilty to conspiracy charges that he misapplied bank funds, committed fraud, entered false information in the bank’s books and reports, and obstructed a financial examination by state and federal regulators. He also pleaded to two counts of making false statements.
Williams was indicted in March and steadfastly maintained his innocence .He waived another indictment after prosecutors considered more charges, agreeing to plead guilty to three counts in a “criminal information.”
He faces up to 15 years in prison — five years and a $250,000 fine on each count — supervised release after prison and restitution, up to twice the gain caused by his offense or twice the loss, whichever is larger. He can never work in banking again.
Prosecutors could seize his assets. Williams, who tried to sell his $6.5 million Grey Oaks home, lost it to a bank at a foreclosure auction.
The magistrate ordered a presentence investigation from the probation department, which will determine prison-term guidelines. The magistrate warned he can’t appeal after his plea is accepted, except under certain circumstances.
Frazier was reluctant to accept the plea, pointing out Williams, who kept saying “we,” had not specified what he’d done — or his intent. Williams then said his intent was to increase capital, when he should have stopped the infusion. He then obstructed state and federal regulators.
“Did you just lie to them or what?” Frazier asked.
“Yes, your honor,” Williams said. “ … They asked me if we financed that capital and I said ‘No we did not.’ ”
Frazier accepted the plea and will write a recommendation to U.S. District Judge Charlene Honeywell, who will consider that and the presentence report when deciding whether to accept the plea at another hearing.
Assistant U.S. Attorney Nicole Waid declined to comment until after sentencing, which has not been set.
Williams’ attorney, Bill Sullivan Jr. of Washington, D.C., blamed Washington regulators for not bailing out Orion.
“Jerry Williams stands proud of the fact that he did everything he could to save Orion Bank in the midst of an unprecedented crisis,” Sullivan said in a prepared statement, contending Williams’ crime pales in comparison to his achievements.
“What he did, he did for the shareholders, customers, depositors and employees of Orion,” he added. “In the end, he personally gained nothing and lost everything. … But make no mistake, Mr. Williams made a judgment error. And for that, he takes full and unqualified responsibility.”
Christy Romero, deputy special inspector general for the federal Troubled Asset Relief Program, contended Williams contributed to the nation’s financial crisis, noting,
“Thousands of banks faced losses during the financial crisis without turning to fraud,” Romero said.