Bank of America exec arrested for bribery

A former New Yorkbased Bank of America executive received tens of thousands of dollars at a time in cash bribes, federal prosecutors say, in exchange for fraudulently helping a New Jersey firm get a line of credit at the bank.

Kurt Phelps, the executive, was arrested Oct. 29 and charged with bank bribery and conspiracy to commit bank fraud. Phelps' arrest is a rare instance of an executive at a major U.S. bank arrested for their conduct as a banker.

Federal prosecutors accused Phelps of a bribery scheme in which he coached Starnet Business Solutions, a Mahwah, N.J. print shop, to falsify financial records to get a line of credit from Bank of America in exchange for cash. Phelps pocketed hundreds of thousands of dollars in bribes over a number of years, prosecutors said.

According to a lawenforcement affidavit filed with the federal charges, Phelps told a co-conspirator that others inside the bank were involved in facilitating the scheme and receiving payoffs as well. No other bank employees appear to have been charged in the alleged bribery scheme, according to public records.

At the time of his arrest, Phelps was a New York City market executive for Bank of America Business Banking. That meant he was responsible for much of the bank's lending to mid-sized businesses in America's largest city.

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Phelps' employer was referred to only as "Victim Bank-1" in an October press release from New Jersey's U.S. Attorney, but Bank of America confirmed Phelps' identity and job title to The Charlotte Observer.

"Mr. Phelps has been fired and we are cooperating with the investigation," said Bill Halldin, a spokesman for the bank. He declined to say whether other bank employees have been fired or placed on leave.