Three RI Execs Face Nearly $1M in Penalties by FDIC for Alleged “Reckless” Loan Fraud
Monday, April 10, 2023
Three banking and finance executives in Rhode Island are being charged by the Federal Deposit Insurance Corporation (FDIC) for “recklessly engaging in unsafe or unsound practices,” as it pertained to the issuance of bridge loans.
Robert S. Catanzaro and Danielle Desrosiers — top executives with Independence Bank in East Greenwich — and finance professional John Ponte are facing nearly a million dollars in restitution and penalties by the FDIC.
According to the FDIC, of the 201 bridge loans referred by Ponte to the bank, 44% defaulted, and the bank was able to charge-off $1.6 million.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTUltimately, SBA suffered an estimated loss of $8.8 million on the guaranteed portion of the loans.
What the FDIC Claims
In the 48-page “Notice of Charges," the agency levels a series of charges.
“Respondent Catanzaro, directly or indirectly, violated regulations, recklessly engaged in unsafe or unsound practices in connection with the Bank, and breached fiduciary duties owed to the Bank from June 2017 through 2019 (Relevant Times). Respondent Catanzaro’s violations, practices, and breaches were part of a pattern of misconduct, caused the Bank to suffer more than a minimal loss or other damage, and caused Respondent Catanzaro to receive financial gain or other benefit. Respondent Catanzaro’s violations, practices, and breaches involved personal dishonesty and demonstrated Respondent Catanzaro’s willful or continuing disregard for the safety or soundness of the Bank,” FDIC states in the enforcement action.
Similar allegations are made against Desrosiers, who is no longer at the bank.
FDIC charges John Ponte with the following:
"The FDIC determined that John C. Ponte was an institution-affiliated party of the Bank. Respondent Ponte, directly or indirectly, violated regulations and recklessly engaged in unsafe or unsound practices in connection with the Bank during the Relevant Times. Respondent Ponte’s violations and practices were part of a pattern of misconduct, caused the Bank to suffer more than a minimal loss or other damage, and caused Respondent Ponte to receive financial gain or other benefit," claims the FDIC.
Further, the FDIC alleges, “Ponte’s violations and practices involved personal dishonesty or demonstrated Respondent Ponte’s willful or continuing disregard for the safety or soundness of the Bank. The FDIC further determined that Respondent Ponte was unjustly enriched in connection with such violations and practices, and that the violations and practices involved a reckless disregard for any applicable regulations. “
For Ponte, this is the second time a federal regulatory agency has taken action against him or one of his companies in recent years.
In 2020, a GoLocal report regarding Federal Trade Commission action against a Rhode Island company sparked national attention.
The Federal Trade Commission charged Ponte Investments, LLC, and its owner with falsely claiming to be an approved lender for a federal coronavirus relief lending program and asked a federal court to immediately halt their misrepresentations.
The FTC’s complaint alleged that Ponte Investments, LLC, also doing business as SBA Loan Program and SBA Loan Program.com, and its owner, Ponte, had been falsely claiming an affiliation with the U.S. Small Business Administration (SBA) and marketing themselves to small businesses as an approved lender under SBA’s Paycheck Protection Program (PPP).
Ponte denied the allegations by the FTC.
Ultimately, Ponte settled with the FTC and paid no penalties.
And in 2009, the RI Department of Business Regulation revoked the broker lending license of another one of Ponte’s companies — Dream House Mortgage.
The DBR decision stated, “On or before March 9, 2009, the Licensee shall in an orderly documented manner transfer all existing loans, transactions, applications and related files currently in process to a duly Rhode Island licensed Loan Broker in good standing; provided however, that immediately upon receipt of this Order, the Licensee shall notify the Department in writing of the name and address of a duly licensed Rhode Island Loan Broker to whom the Licensee proposes to transfer said files. No transfer shall take place without the Department's approval of the 93000339LB proposed by the Licensee. “
All Three Deny FDIC’s Allegations.
In a phone interview with GoLocal on Friday, Heather Marshall, President and COO of Independence Bank said, “The bank had nothing to do with the actions. And, we deny all of the allegations. Mr. Catanzaro denies that he engaged in any prohibited conduct and will vigorously defend himself against the FDIC allegations.”
Independence Bank, located in East Greenwich, has been cited by federal regulators in the past. In 2019, Independence entered into a consent decree with the FDIC on unrelated issues, and was forced to comply with a range of regulatory requirements.
Today, Catanzaro serves as the CEO to the Bank.
Ponte said in a statement provided to GoLocal, "I strongly dispute the inaccurate and unfounded allegations in the Federal Deposit Insurance Corporation's ("FDIC") Notice of Charges filed against me, and others. Simply put, these charges are contrary to the documentary evidence available in this matter. The FDIC has chosen to ignore the facts. As recently as earlier this week, I provided the FDIC, once again, with evidence discrediting certain of the allegations in the Notice of Charges.
"For example, the Notice of Charges alleges certain conduct that the FDIC suggests constitutes forgery and/or fraud. This is not the case. The instrument referenced in the Notice of Charges was merely a wire transfer request, and not a confirmation as alleged. The subject request was cancelled as Independence Bank modified its closing conditions, including a prior requirement that a UCC Termination be obtained prior to closing and funding. No such termination was ever obtained by the bank as it altered its own closing conditions – I had nothing to do with this process. It seems that an FDIC-insured and regulated financial institution would know the difference between a request and a confirmation," said Ponte.
Ponte blames former bank officials, stating, "The allegations contained in the Notice of Charges are the result of an organized effort by Independence Bank’s former senior management to deflect its failure to comply with certain banking guidelines and procedures. The bank’s objective was to scapegoat me for its lack of sound lending practices, as well as to cover up its lack of adherence to well-established standards of practice in its SBA loan program, and failure to report accurate information to the FDIC."
"More specifically, certain individuals formerly and/or currently affiliated with Independence Bank waited for an opportune time to shift blame away from their shortcomings and place it on me. This includes impugning my professional and personal business reputation by making scurrilous and unsubstantiated attacks on my character. Rather than terminate its relationship with me and my firm, Independence Bank appears to have been motivated by greed despite the fact that it now alleges I was such a bad person to conduct business with. This entire situation boils down to a clear lack of control in Independence Bank's compliance department, which wholly failed in its charge," added Ponte.
"I did not cause any harm to any clients of the SBA loan program," he adds.
Ponte asserts Independence has a "bad record."
According to Ponte, "Independence Bank has routinely been cited by the SBA for deficiencies in its underwriting, securitization, servicing and/or collections, which resulted in the loss of its authorization as an SBA lender because of its prior conduct. Neither myself nor my firm has never been the subject of any adverse action by the SBA, and we continue to responsibly and ethically originate potential SBA loan applications for SBA lenders pursuant to each individual lenders’ guidelines or policies."
"It is mine and my company’s goal to continue to work closely with our clients and partners to help them secure financing to stabilize and expand their businesses during these challenging economic times," added Ponte.
Desrosiers criticized the FDIC and Independence Bank's executives for their actions.
“I am disappointed that the FDIC has chosen to make these baseless allegations while I have been fully cooperating with their investigation. These allegations are a coordinated effort by various Senior Members of Management at Independence Bank to deflect responsibility for their failure to comply with the Small Business Administration’s (SBA) regulations and not to disclose accurate information to the Federal Deposit Insurance Corporation (FDIC)," said Desrosiers.
"I resigned from the Bank over five years ago in January of 2018. The Bank was fully made aware of my personal relationship, which resulted in me stepping down from my COO position in January of 2017. To be clear, I did not engage in any improper conduct with the SBA loan program. I followed the Bank’s direction and guidance with regards to the program as Senior Management had over 20 years of experience with the SBA. I was a project manager for the program and had no past lending experience. I was not an underwriter, approver, closer or servicer," she stated.
Desrosiers adds, "My actions while employed at Independence Bank, and since resigning, were fully transparent to the bank’s leadership. Mr. Ponte and I were in a personal relationship and living together. The transfers were related to living expenses. We have proven to the FDIC that these transfers took place well before any involvement with MCA financing and continued after I left the bank and was still living with Mr. Ponte. These allegations made against me by a former representative of the bank are without merit and I will vigorously defend myself. I will continue to fully cooperate with the FDIC, as I have been for the last four years.”
This story was first published 4/8/2023 at 6:45 AM
