A former bank director and attorney from Monsey has been sentenced to two-and-a-half years in federal prison for obtaining a fraudulent $1.4 million loan as the bank was in the process of failing.
U.S. District Judge George B. Daniels also ordered Mendel Zilberberg, 65, to forfeit $506,000 and pay $1.1 million in restitution to the FDIC and the bank, March 19 in Manhattan federal court.
A jury convicted Zilberberg this past July of bank fraud, conspiracy, making false statements to a bank, and embezzlement while he was a director of Park Avenue Bank in 2009.
Zilberberg conspired with Aron Fried, a client of his Brooklyn law firm. Fried wanted to borrow money to invest in a home health care business but was ineligible because of a criminal record. So the men used a fake borrower to stand in for them.
Zilberberg expedited the loan application and made sure it was not closely scrutinized, according to court records. Quickly after the $1.4 million loan was approved, the borrower transferred the funds to several accounts.
Zilberberg received about $500,000 and the rest went to Fried and an associate. The fake borrower got nothing.
Park Bank was on the precipice of failure as the scheme was carried out, and six months later state banking regulators shut it down. Valley National Bank bought the assets.
A year after the loan was issued, the borrower defaulted, leaving Valley National Bank and the Federal Deposit Insurance Corp. with a $1.1 million loss.
Zilberberg was indicted in 2019.
U.S. Probation officials calculated that he could be imprisoned for up to four years, under non-binding sentencing guidelines.
Defense lawyers Benjamin Brafman and Jacob Kaplan recommended probation and home confinement.
“Mendel’s conduct in this case more than 14 years ago stands in stark contrast to the myriads of good deeds that he has selflessly engaged in throughout his life,”
they stated in a sentencing memorandum.
They described a volatile childhood. His mother was an Auschwitz survivor with severe psychiatric problems who often beat her children. His father was often absent, and when present he parented with fear, intimidation, belittlement, and beatings.
Despite the grim upbringing, his lawyers said, Zilberberg became a dedicated husband and father and a community role model.
Fifty-five support letters submitted to the judge attest to his generosity, compassion and mentoring skills.
Motty Schulman, who as a troubled youth who had fallen in with the wrong crowd, credited Zilberberg with “literally saving my life” by helping him navigate complex relationships.
Nissim Black, a black Orthodox Jew who encountered racism within their community, said Zilberberg “was an ear when I needed to be heard and he was a warrior when I needed to fight.” Now Black is an international entertainer and motivational speaker.
In 2012, when Hurricane Sandy devastated the Seagate section of Brooklyn, he organized relief efforts and helped raise more than $1 million to fix 80-some homes.
In 2015, he spearheaded a global campaign to find a kidney donor for a member of the community.
He provided free legal work for clients pursuing justice, such as the father of 12 children whose life savings were stolen by a con artist.
Many of his acts, his lawyers said, were done without seeking recognition.
“The sort of man that Mendel Zilberberg has always been and continues to be,” they argued, “should be the court’s ultimate focus of attention.”
Assistant federal prosecutors Dina McLeod and Daniel G. Nessim recommended four years in prison.
Zilberberg knew the bank was in crisis and approaching failure, they stated in a sentencing memorandum, but rather than observe his fiduciary duties he saw an opportunity.
His “conduct was motivated by greed and was undertaken without regard to his obligations to the bank, society, and his own family and friends,” they stated.
“He needed the money and he believed he would be able to deceive the bank, so he did.”
Judge Daniels recommended that Zilberberg be imprisoned at FCI-Otisville in Orange County and ordered him to surrender by Aug. 1.
