A federal banking agency will hold a hearing on Aug. 31 on charges that a former Westchester banker concocted a kickback scheme.
The Office of the Comptroller of the Currency has accused Biagio Maffettone, formerly of Eastchester, of demanding kickbacks from a loan officer on mortgages that Citizens Bank closed in Chappaqua, Katonah and Scarsdale.
His actions were “part of a pattern of misconduct and resulted in pecuniary gain or other benefit,” the OCC charges, and “involved personal dishonesty … and demonstrated a willful or continuing disregard for the safety or soundness of the bank.”
Maffettone denied any wrongdoing, in a formal answer to the charges, and depicted the alleged kickbacks as his legitimate share of commissions. He admitted “poor judgment,” in not disclosing the arrangement to bank officials, but says he did not engage in “personal dishonesty.”
Citizens Bank hired Maffettone as a sales manager in 2015 and promoted him to Vice President and Home Mortgage Area Manager in 2017.
Before the promotion, the OCC states, Maffettone had overseen loans that were referred to Citizens Bank from a large real estate firm with offices in Chappaqua and Katonah. The firm is not identified in the complaint.
In the new position, where he was supervising loan officers, he was no longer paid commissions and was required to relinquish control of referrals from the real estate firm.
He assigned a junior loan officer to cover the firm’s Katonah office, but allegedly told the employee not to pursue loan referrals from real estate agents that he deemed part of his own book of business.
He assigned another loan officer to cover the real estate firm’s Chappaqua and Scarsdale offices and allegedly demanded half of the commissions earned on loans referred from the real estate firm.
If the loan officer did not agree to the arrangement, the OCC says, Maffettone said he would consider going back to his previous position and keeping the real estate firm’s business.
The loan officer “reluctantly accepted the kickback arrangement,” the complaint states, based on Maffettone’s assertion that it would be temporary.
Every week, according to the OCC, Maffettone met with the loan officer to discuss the status of loans. He insisted on secrecy, and he arranged monthly drop-offs of cash payments, typically in the bank’s parking lot.
In early 2018, he told the loan officer that he was displeased with his compensation from the bank, according to the OCC, and that the kickbacks would continue indefinitely.
The loan officer reported the scheme to supervisors. When Maffettone became aware of the bank’s investigation, he allegedly told the loan officer to “deny, deny, deny.”
The day before he was scheduled to meet with bank investigators, he resigned his position.
Maffettone allegedly received $52,023 in kickbacks from September 2017 to October 2018.
Maffettone says his conduct caused no harm. Citizens Bank retained or gained sources of new loans, and no customers paid higher fees on the loans.
He says that splitting commissions is a common industry practice, and he believes that Citizens Bank would not have objected, if he had disclosed the arrangement, so long as he fulfilled his managerial duties.
In fact, he says, “upon his resignation he was told by several people that he was the best manager Citizens had.”
The OCC is seeking a $150,000 fine and an order banning Maffettone from working for any federally insured depository institutions.
Without admitting wrongdoing, Maffettone’s attorneys state, he agrees to rescind the payments.
“Mr. Maffettone submits that his conduct, while inartful, should not warrant enforcement action,” his attorneys state, “that will effectively end his career and severely impact his ability to support his family.”
The hearing will be held before an administrative law judge at the federal bankruptcy courthouse in Providence, Rhode Island, where Citizens Bank is based.
