Fraud trial begins for former executives

WILMINGTON, DEL. » Four former executives of Wilmington Trust Corporation went on trial Monday on federal fraud and conspiracy charges, with prosecutors telling jurors the defendants hid hundreds of millions of dollars in bad loans as the bank’s commercial real estate loan portfolio cratered after the 2008 financial crisis.

Prosecutors said the four concealed the truth from regulators and investors about the bank’s loan portfolio shortly before the century-old institution was hastily sold in 2011, near the edge of collapse. The bank, which was founded by members of the DuPont family, imploded despite receiving $330 million from the federal government’s Troubled Asset Relief Program.

Before the fire sale to M&T Bank, Wilmington Trust also raised $287 million in a 2010 stock offering while concealing the truth about its shaky financial condition to investors, prosecutors told jurors Monday.

“The defendants lied and put other people’s money at risk,” assistant U.S. Attorney Lesley Wolf said in her opening statement.

Former bank president Robert V.A. Harra Jr., along with former chief financial officer David Gibson, former chief credit officer William North, and former controller Kevyn Rakowski, are charged with fraud, conspiracy and making false statements to federal regulators.

The bank itself — the only financial institution to be criminally charged in connection with the federal bank bailout program — reached a $60 million settlement with prosecutors last year just as the trial was set to start.

In reaching the settlement, Wilmington Trust did not acknowledge any liability, and the individual defendants have maintained their innocence.

“The evidence will show that these people didn’t lie,” Harra’s defense attorney, Michael Kelly,