Brian D. Bailey, former head of Delaware banking for the defunct Wilmington Trust Corp., once Delaware's largest bank, was indicted today on bribery, fraud and money laundering charges in Delaware federal court. According to federal prosecutor Charles Oberly, Bailey and former Artisans Bank chief lending officer and MidCoast Bank chief executive officer James Ladio, who pleaded guilty to fraud charges in December, lent each other more than $1.5 million in personal loans illegally disguised to look like business loans. Bailey's lawyer didn't immediately return a call seeking comment.
According to the indictment, the loans were discovered as Wilmington Trust began collapsing under the weight of $1 billion in bad loans in 2010. Bailey resigned and was hired by Ladio as a MidCoast loan officer; MidCoast lent Bailey additional money, also under false pretences, the government says, to help him pay back his Wilmington Trust loans. Wilmington Trust was purchased by M&T Bank at a deep discount share price, and more than 700 workers laid off.
MidCoast had agreed to be purchased by Bryn Mawr Trust Co. last year, but the deal blew up when Ladio unexpectedly resigned, prior to his indictment. Bailey resigned from MidCoast when a former Wilmington Trust colleague, Joseph Terranova, pleaded guilty to bank fraud in a case that raised questions about the conduct of Bailey and other former Wilmington Trust colleagues.
In other cases, Wilmington Trust borrowers and lenders have been charged with fraud for conspiring with corrupt borrowers since then, but prosecutors have spared the senior bank executives who failed to notice the multiple frauds committed on their watch.