Tax evasion charged as probe of failed U.S. bank widens
WASHINGTON (Reuters) - A Kentucky businessman was arrested on Monday and charged with evading $53 million in taxes in a multi-faceted case stemming from an ongoing U.S. investigation of failed Park Avenue Bank.
Called "a vortex of fraud" by prosecutors, Wilbur Huff, 51, was arrested at his Kentucky home and charged in a 13-count indictment that also involved two others, said a statement from Preet Bharara, U.S. attorney for the southern district of New York.
The other two suspects - Matthew Morris and Allen Reichman - were arrested at their homes in New York, Bharara said.
All three had relationships with Park Avenue Bank, which failed in March 2010. Former Park Avenue Bank President Charles Antonucci pleaded guilty in October 2010 to securities fraud and other charges. He was the first person convicted of attempting to steal U.S. government bank bailout funds during the financial crisis from the Troubled Asset Relief Program, or TARP.
Huff, Morris and Reichman were "alleged co-conspirators" with Antonucci, and the arrests on Monday represented "part two" of a continuing probe of the bank, Bharara said.
"Huff was a vortex of fraud who also evaded over $50 million in taxes," said Bharara.
Huff posted bail and agreed to home detention in Kentucky, a representative for Bharara's office said. Huff's lawyer, David Lambertus in Louisville, declined to comment.
It could not be immediately determined who was representing the other two defendants.
From 2008 to 2010, Huff allegedly controlled a Florida-based payroll servicing company that was supposed to handle federal tax payments to the Internal Revenue Service for businesses in at least three states, according to the prosecutors' grand jury indictment unsealed on Monday.
Instead of paying the employment taxes these companies owed to the IRS, Huff allegedly stole $53 million for his own uses, including the payment of mortgages and purchase of designer clothing, jewelry and luxury cars among other items, the indictment said.
The companies usually wired money for their employment taxes to Park Avenue Bank, the statement said.
"Huff allegedly violated his clients' trust by pocketing payroll taxes that were to be paid to the IRS on their behalf," IRS criminal investigation division special agent Jose Gonzalez said in a statement.
Morris was formerly the bank's senior vice president and Reichman was formerly executive director of investments at an investment bank and financial services company involved in a related insurance fraud scheme, the statement said.
Huff, of Louisville, was charged with 13 counts, including tax evasion, wire fraud and conspiracy to commit bank bribery. He could face up to 30 years in prison, the statement said.
Morris was charged with five counts, including conspiracy and fraud. He could face up to 30 years in prison, while Reichman was charged with one count of conspiracy to commit wire fraud and could face up to 20 years.
The case is U.S. v. Wilbur Anthony Huff, et al.