Barry Bekkedam pleads not guilty in Nova Bank case

Former Villanova investment manager Barry R. Bekkedam pleaded not guilty Tuesday to charges that he helped orchestrate fraudulent loans from Nova Bank in a bid to secure government bailout money for the now-defunct Berwyn institution.

Bekkedam, who moved from the Main Line to Hobe Sound, Fla., in 2010, declined to comment after a 15-minute hearing in U.S. District Court for the Eastern District of Pennsylvania in Philadelphia.

The investment manager, who specialized in deals for wealthy clients who needed lots of income to support high-end lifestyles, was released on his own recognizance after signing a $250,000 bond.

After the hearing, defense attorney Michael J. Engle said Bekkedam - perhaps best known here as a basketball player at Archbishop Carroll High School and Villanova University in the 1980s - intended to fight the case in court.

"We believe that there's absolutely zero merit to the allegations the government has brought in this indictment, and Mr. Bekkedam looks forward to having a jury acquit him in this matter in the near future," Engle said.

Bekkedam's defense team also includes lawyers from a Washington-area firm with deep experience in financial matters, including trial experience for the Securities and Exchange Commission and the Public Company Accounting Oversight Board.

Those lawyers, from Shulman, Rogers, Gandal, Pordy & Ecker P.A. in Potomac, Md., are expected to ask Judge C. Darnell Jones II to dismiss the indictment, filed under seal in October.

The charges against Bekkedam, unsealed last month by the U.S. Attorney's Office in Philadelphia, allege that in 2009 he helped engineer a series of fraudulent Nova loans to individuals who then would immediately invest the money into Nova, to help it qualify for $13.5 million in bailout funds.

U.S. Treasury officials required Nova to raise $18 million on its own to receive $13.5 million under the Troubled Asset Relief Program, which included a program to stabilize banks during the financial crisis. In October 2012, after a buyer could not be found, the Federal Deposit Insurance Corp. took over Nova and closed its 12 branches.

Also indicted in the case was Brian M. Hartline, who cofounded Nova with Bekkedam in 2002, when they were neighbors in Collegeville. Hartline, who was the bank's chief executive officer, made his initial court appearance Feb. 3 and was released on his own recognizance.

Many of the facts in the 17-page indictment, which charges Bekkedam and Hartline with conspiracy to defraud the United States, wire fraud, and other crimes, have been public for several years, laid out in a series of civil lawsuits against Bekkedam or involving people or companies with links to him.

Bekkedam - who had a taste for Ferraris, Aston Martins, and private-jet travel to meet clients - has either won dismissals of the civil suits or was dropped as a defendant.

In April 2014, the SEC sued Bekkedam over his role in securing $100 million in investments for Scott Rothstein's $1.2 billion Ponzi scheme, which blew up in fall 2009. That case is pending.

David L. Axelrod, the assistant U.S. attorney who was listed on the docket in October, moved in November to the SEC, where he is now regional trial counsel in the Philadelphia office.

At the core of the criminal complaint are allegations that Bekkedam and Hartline used Nova's "own money to fraudulently give the appearance of outside investment" by making loans that came right back to the bank. If the case goes to trial, arguments will likely center on complex financial topics such as what qualifies as bank capital.

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