Middletown Woman Admits To Bank Fraud

MIDDLETOWN, NJ — On Wednesday, a Middletown Township, NJ woman working as an attorney admitted her role in an elaborate scheme to defraud a bank and federal bank regulators, Acting U.S. Attorney William E. Fitzpatrick announced. Donna Conroy, 57, of Middletown, pleaded guilty in Newark federal court to one count of conspiring, and one count of making false entries.

Conroy was working an attorney licensed to practice law in the State of New Jersey, and was a partner in a law firm located in Cranford. She acted as outside counsel to FSB (First State Bank), a state-chartered bank located in Cranford, which was one of the law firm's biggest and most significant clients.

From 2009 to 2010, Conroy and four other co-conspirators engaged in an elaborate scheme designed to deceive the FDIC and others about the financial health of FSB, federal prosecutors said. The other conspirators were not named. There were three phases to the scheme, prosecutors said: The first phase began with a transaction that appeared as though outside investors had injected up to $7 million of new capital into the bank. But in fact, it was FSB's own funneled money that was misused to obtain that capital. At this point, the bank started being audited. In the second phase of the scheme, various conspirators lied to FSB in order to receive millions of dollars in loans in order to cover up the fraudulent nature of the capital infusion and end inquiries from FSB’s auditors. The final phase involved lying to the FDIC and FSB, among others, about the fraudulent capital infusion and loans.

As the bank's lawyer, Conroy and others tried to hide FSB's stock ownership by falsifying documents, prosecutors said. She admitted to the crimes this week.

Conroy could be facing a maximum 30-year sentence and a fine of $250,000. Sentencing is scheduled for Aug. 24. She was represented by Morristown attorney John C. Whipple. Prosecution was led by Senior Litigation Counsel Andrew Leven.