A federal jury has found Monsey lawyer Mendel Zilberberg guilty of fraud in a scheme to obtain a $1.4 loan from Park Avenue Bank, on whose board of directors he served.
Zilberberg, 65, was convicted on five charges, including conspiracy, making false statements to a bank and misapplication of bank funds, July 11 in U.S. District Court, Manhattan.
In 2009, Zilberberg conspired with Aron Fried, a client of his Brooklyn law firm, according to court records. Fried and an associate wanted to borrow money to invest in a home health care business but did not qualify for a loan. So they used a straw borrower to stand in for them.
Zilberberg, according to court records, shepherded the loan application at the bank. On the same day the application was submitted, for instance, he directed the loan officer to “process ASAP.” A week later he messaged the employee to prioritize the loan because it “is the important one.”
The $1.4 million unsecured line of credit was approved in September 2009. The funds issued to the straw borrower were quickly transferred to bank accounts controlled by the conspirators.
Zilberberg pocketed more than $500,000, according to court records. Fried and his associate split the remainder. The straw borrower got nothing.
Six months later, March 2010, New York State banking regulators shut down Park Avenue Bank, citing ineffective management and inadequate capital. The Federal Deposit Insurance Corp. seized the assets and sold them to Valley National Bank, New Jersey.
The feds charged the former bank president, Charles Antonucci Sr., of Fishkill, with fraud, embezzlement and bribery, in a scheme unrelated to the Zilberberg crime.
Six months after the bank collapsed, the straw borrower defaulted on his loan. Valley National Bank and the FDIC lost about $1.1 million.
Antonucci was sentenced in 2015 to 30 months in prison. He was released on Jan. 3, 2018.
Fried’s associate, Abraham Kahan, was arrested in 2017 and accused of conspiracy to commit bank fraud and conspiracy to make false statements to a bank. The court docket indicates no case activity since April 2021.
Valley Bank sued the straw borrower and his wife, Herschel and Pauline Sauber of Brooklyn. One year ago, a New York County Supreme Court justice awarded the bank a $2.7 million judgement, including 11 years of interest.
Zilberberg and Fried were indicted in 2019.
Last year, Fried pled guilty to conspiracy to commit bank fraud. He was sentenced this past April to one year and one day in prison.
The five criminal charges against Zilberberg carry maximum sentences ranging from five to 30 years in prison. Sentencing by U.S. District Court Judge George B. Daniels is scheduled for Nov. 29.
