An Englewood, N.J. real estate developer pleaded guilty and admitted his role in a conspiracy to illegally obtain nominee loans from Mariner’s Bank, the U.S. Attorney for the district of New Jersey announced late last week.
In a release, the federal authorities said James Demetrakis, 79, pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to an information charging Demetrakis with one count of conspiracy to make false entries to deceive a financial institution and the Federal Deposit Insurance Corp. (FDIC) The FDIC’s Office of Inspector General (OIG) participated in bringing the charges.
The U.S. Attorney said that Demetrakis’ longtime business partner Fred Daibes (who faces charges in a related case), was the founder and, until April 2011, chairman of Mariner’s board of directors. The bank, federal authorities said, was subject to federal banking regulations that placed limits on the amount of money that the bank could lend to a single borrower.
Between January 2008 and December 2013, federal authorities charge, Demetrakis conspired with Daibes and others to orchestrate a nominee loan scheme designed to circumvent the lending limits by ensuring that millions of dollars in loans flowed from Mariner’s Bank to the nominees to Daibes, while concealing from both Mariner’s Bank and the FDIC Daibes’ beneficial interests in those loans.
The U.S. Attorney alleged that Demetrakis served as the nominee for a $1.8 million line of credit and recruited two of his relatives to serve as nominees for a $2.625 million loan. After receiving the proceeds of the loans, federal authorities said, Demetrakis and the other nominees distributed the money to Daibes who – with the nominees, including Demetrakis — failed to disclose to Mariner’s Bank that Daibes arranged to make both the interest and principal payments on the loans.
“The nominee loans became delinquent on certain occasions when Daibes failed to give the nominees, including Demetrakis, the funds to make the monthly payments,” the U.S. Attorney said. After the FDIC began an investigation into one of the loans, federal authorities said, Daibes and others created and submitted to the FDIC “a false, backdated sales contract to make it appear as though Demetrakis had obtained the $1.8 million loan from Mariner’s Bank in order to pay Daibes for his interest in a real estate venture.”
The conspiracy charge to which Demetrakis pleaded guilty carries a statutory maximum of five years in prison and a maximum fine of $250,000, the U.S. Attorney said. The court scheduled sentencing for July 23.