Rockland Lawyer Accused In NYC Bank Fraud

MONSEY, NY — A Monsey resident is one of two people accused of bank fraud connected to a scheme to obtain a $1.4 million loan. Prosecutors said they set up a phony or "straw" borrower to obtain the loan, then used the proceeds themselves, while the borrower of record defaulted.

Mendel Zilberberg of Monsey, a former director at Park Avenue Bank, was charged with bank fraud Wednesday morning along with Aron Fried of Toms River, New Jersey. Zilberberg, 61, was separately charged with embezzlement and misappropriation of bank funds.

"In a textbook case of self-dealing and breach of fiduciary duty, Zilberberg allegedly exploited his position at the bank to grease the skids for a loan given under blatantly false pretenses, a huge chunk of the proceeds of which he himself dipped into," Manhattan U.S. Attorney Geoffrey S. Berman said in the announcement.

Prosecutors said Fried and an unnamed co-conspirator wanted to borrow money in 2009 for a home health care business — but Fried's partner had a criminal record and was not credit-worthy. So the two enlisted Zilberberg, an attorney and director at the Park Avenue Bank, to push a phony loan application through the process.

Together, the three concocted a false premise for the loan, including a front person as the borrower; supported the loan application with false representations; and set up pass-through bank accounts to funnel the proceeds of the fraudulent loan to themselves, prosecutors alleged.

In total, Zilberberg received at least $466,000, Fried received at least $434,000, and their co-conspirator received the rest of the loan proceeds. The loan ultimately defaulted, resulting in a loss of over $1 million to the bank, prosecutors alleged.

Zilberberg and Fried, who is 46, are each charged with one count of conspiracy to commit bank fraud, one count of bank fraud, and one count of making false statements to a bank, each of which carries a maximum sentence of 30 years in prison, as well as one count of conspiracy to make false statements to a bank, which carries a maximum sentence of five years in prison.

Zilberberg is also charged with one count of embezzlement and misappropriation of bank funds, which carries a maximum sentence of 30 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Back in 2015, former Park Avenue Bank president Charles Antonucci was the first person to be convicted in connection to the federal bailout program after the 2007 financial crisis. He pleaded guilty to fraud, bribery, embezzlement and conspiracy, according to Crain's New York Business.

The Park Avenue Bank was closed in 2010 by the New York State Banking Department.