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Loan Officer Indicted Of Mortgage Fraud May 9, 2012

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Tuscon, AZ-Sergio Martinez was indicted of five counts of bank fraud, false statements to influence a financial institution, wire fraud and conspiracy to commit wire fraud. The allegation in the indictment state that Mr. Martinez participated in a scheme to defraud a financial institution in order to get financing.

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Hospice CFO Pleads Guilty To Bank Fraud Charges March 29, 2012

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Alabama-  The former CFO and minister for American Homecare Hospice entered a guilty plea in connection to embezzlement of hospice funds in the approximate amount of: $466,500.  The embezzlement took place between 2007 and the time of his arrest.

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Dayton woman and N.Y. man arrested for bank fraud February 20, 2012

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Dayton woman and  N.Y. man arrested for bank fraud

FBI and police officers carted away evidence out of a Dayton home today. The home was being searched after a search warrant had been issued due to the fact that the current occupants Razia Bibi and Tahir Lodhi had been arrested earlier in the morning for bank fraud.

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Defendant Charged in $3.7 Million Bank Fraud Scheme May 25, 2010

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The owner of a Chicago-based residential property development company was charged yesterday with defrauding the State Bank of Countryside of approximately $3.7 million in connection with loans for the development of property in the West Lincoln Park neighborhood in Chicago. Seth M. Harris, 38, of Chicago, was charged in a single-count information filed in U.S. District Court.

Harris was the owner of SMH Development, LLC, of Chicago, a residential property development company which specialized in the construction of single-family homes, primarily in the Lincoln Park neighborhood of Chicago.

According to the information, from approximately December 2007 to January 2009, Harris schemed to fraudulently obtain land and construction loans from the State Bank of Countryside, located in Countryside, Illinois. Harris allegedly sought and obtained loans totaling approximately $1,979,068 to acquire properties at 1701 and 1703 N. Dayton Street, Chicago, Illinois in part by making misrepresentations concerning Harris’s and SMH Development’s equity in real properties and their amount of debt. Specifically, Harris provided a personal financial statement to State Bank of Countryside in which he falsely represented that he and SMH Development held an ownership interest in a Deerfield, Illinois, property and were beginning construction on the Deerfield property as well as at the Dayton properties. Harris further made false verbal representations to a representative of State Bank of Countryside concerning SMH Development’s ownership of the Deerfield property as well as the amount of monthly rental income received from another property.

According to the information, Harris later sought and obtained construction loans, totaling approximately $3,746,000, to build single-family residences on the Dayton properties. In order to obtain the construction loans, Harris falsely represented to the State Bank of Countryside that the residence to be built at 1703 N. Dayton was already under contract, forging a signature on a false contract purporting to memorialize the sale of that property. Harris allegedly provided the State Bank of Countryside with the forged contract and a copy of a $500,000 escrow check that falsely purported to show a deposit for the purchaser of the 1703 N. Dayton home.

The information further alleges that, in order to draw funds from the construction loans, Harris submitted to the State Bank of Countryside forged waiver of lien forms, which contained false notarized subcontractors’ signatures and which falsely purported to show that Harris had already made payments to these subcontractors.

Harris allegedly used proceeds of the scheme for his personal benefit and caused the State Bank of Countryside to incur a loss of approximately $3,693,738.

Several People Indicted for Conspiracy, Bank Fraud, Mail Fraud, and Money Laundering March 15, 2010

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On March 12, 2010, a federal grand jury in the District of Puerto Rico returned an 83-count indictment charging Nancy Hernández-Chavez, her daughter, Noemí Pérez-Hernández, Manuel “Manolo” Vargas-Colón, Iris Yadith Ortíz-Rodríguez, Eric Samuel Pastrana-Miray, and Luis Fernando Capó-Ramos with conspiracy, bank fraud, mail fraud, and money laundering.

The indictment alleges that from approximately October 2006 through September 2007, New York Mortgage Bankers (NYMB), acting through its management team consisting of all of the above named defendants, engaged in a loan kiting scheme that involved more than $4.4 million in loan proceeds.

During the entire period of the conspiracy, NYMB sold some 29 residential mortgage loans to investor banks in the secondary market without having cancelled the underlying mortgages on those properties. The failure to cancel the existing mortgages on those 29 properties, resulted in: (1) those NYMB clients who refinanced their existing mortgages ended up having two mortgages over their property; (2) those individuals who sold their homes to NYMB clients ended up continuing to have a mortgage in their name over the property that they had just sold; and (3) the banks in the secondary market were fraudulently led to believe that they had acquired a first mortgage over the respective real estate properties, when in truth and in fact, the most that they acquired was a second mortgage, and sometimes a third mortgage, over those same properties.

In an effort to conceal the existence of the conspiracy to defraud, the above named defendants commissioned the payment of the monthly payments on the underlying loans rather than cancelling the underlying debt. The effect of making those monthly payments on each of the 29 mortgages was to lull the investors in the secondary market into thinking they had acquired a first mortgage, and the borrowers and sellers into thinking that their respective underlying mortgages had been satisfied.

Nancy Hernández-Chávez, was the President and sole stockholder of NYMB. She is currently serving a six-year sentence in the Puerto Rico Womens’ Detention Center, located in Vega Alta, P.R., for having pled guilty to violating one count of Title 7, Laws of Puerto Rico Annotated, Section 1057a(5). As part of her plea agreement, 460 charges of aggravated illegal appropriation pending against her were dismissed with prejudice by state authorities. NYMB, meanwhile, acting through defendant Hernández-Chávez, pled guilty to 483 other charges. The Puerto Rico Government then requested the dismissal, with prejudice, of all the charges filed against defendant Noemí Pérez-Hernández.

Defendant Noemí Pérez-Hernández was the Executive Vice President, Director of Production and Treasurer of NYMB. Pérez-Hernández worked for NYMB from at least 2005 through approximately April 2007. Payroll records indicate that defendant Pérez-Hernández continued to receive payments from NYMB for several months thereafter. From at least 2005 through April 2007, however, Pérez Hernández supervised the day-to-day operations of the bank.

The third defendant, Manuel “Manolo” Vargas-Colón, held various positions within NYMB, including Manager for the Río Piedras Branch, Business Planner, and Vice President of Production Operations. Vargas-Colón had the authority, among other things, to make check requests for payment by NYMB and actively decided which of the underlying loans were going to be paid-off and which were not.

The fourth defendant, Iris Yadith Ortíz-Rodríguez, held various positions within NYMB, including Human Resources Consultant and Consultant in Operational Matters. Ortíz-Rodríguez worked at NYMB from approximately June 2006 through December 2008, and after April 2007, assumed many of the responsibilities previously handled by defendant Pérez-Hernández, including the supervision of the accounting department. Though just a consultant to NYMB, Ortíz-Rodríguez assumed an important managerial role enabling and facilitating the fraudulent scheme.

The fifth defendant, Eric Samuel Pastrana-Miray, was the Manager of the shipping department of NYMB. The shipping department was responsible for packaging and selling the loans closed by NYMB to investors in the secondary market. As the Manager of the shipping department, he was also responsible for: (a) negotiating with the investors a reasonable price for the purchase of a valid first mortgage over the respective property being sold; and (b) providing the investors with truthful and complete information demonstrating that NYMB had, in fact, satisfied the underlying debt on the property and that NYMB was selling a valid and enforceable first mortgage over the properties.

The sixth defendant, Luis Fernando Capó-Ramos, was a Certified Public Accountant (CPA) who provided services to NYMB as an external auditor from at least 2006 through May 2007. From May 2007 and continuing through approximately December 2007, he worked as comptroller for NYMB. Defendant Capo played an integral part in lulling NYMB clients into thinking that their underlying loans would be cancelled quickly, when, in reality, many of those same loans remain uncancelled

First Defendant Charged with Attempting to Defraud the (TARP) Troubled Asset Relief Program March 15, 2010

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Today, CHARLES J. ANTONUCCI, SR., the former President and Chief Executive Officer of The Park Avenue Bank, was arrested on allegations of self-dealing, bank bribery, embezzlement of bank funds, and fraud, among others. ANTONUCCI also was alleged to have attempted to fraudulently obtain more than $11 million worth of taxpayer rescue funds from the Troubled Asset Relief Program, or TARP. ANTONUCCI is the first defendant ever charged with attempting to defraud TARP. Additionally, ANTONUCCI was alleged to have used The Park Avenue Bank in a scheme to defraud two pastors of a Florida congregation out of more than $100,000 set aside to build a new church.

On the evening of Friday, March 12, 2010, the NYSBD seized The Park Avenue Bank and appointed the FDIC as receiver; FDIC has arranged for the sale of The Park Avenue Bank.

According to the Complaint unsealed today in Manhattan federal court:

The Park Avenue Bank

The Park Avenue Bank was a federally insured bank headquartered at 460 Park Avenue, New York, New York, with retail branches in Manhattan and Brooklyn. The bank’s clients consisted primarily of small businesses, for whom the bank made loans, extended lines of credit, and maintained depository accounts. As of the end of 2009, the bank had approximately $500 million on deposit, and over $520 million in assets. ANTONUCCI served as President and Chief Executive Officer (“CEO”) of The Park Avenue Bank from June 2004 to October 2009, and also served on its Board of Directors.

The Park Avenue Bank was federally-insured and regulated by the FDIC. Also, as a bank chartered under the laws of New York State, The Park Avenue Bank was regulated by the NYSBD. The bank was required to make certain regular disclosures to these regulators demonstrating that it was financially sound and that it had adequate capital.

FDIC and NYSBD regulations require banks such as The Park Avenue Bank to maintain certain levels of capital, as a percentage of the bank’s total assets. Banks that do not maintain appropriate levels of capital are subject to various restrictions on their activities, and may be required by regulators to raise additional capital. Banks which do not meet minimum capital requirements can be closed by the NYSBD or the FDIC.

The Park Avenue Bank was also an applicant to the Capital Purchase Program of the Troubled Asset Relief Program (“TARP”). The purpose of TARP was to provide funds to stabilize and strengthen the nation’s financial system by increasing the capital base of viable institutions, enabling them to increase the flow of financing to U.S. businesses and consumers. TARP funds were made available to qualifying banks; one of the critical elements of the TARP qualification process was the capital position of the applicant bank.

Self-Dealing, Bank Bribery, And Embezzlement

The Complaint alleges that ANTONUCCI engaged in numerous instances of self-dealing while President and CEO of The Park Avenue Bank, including authorizing extensions of credit and overdrafts to customers with whom he had financial relationships; authorizing extensions of overdraft credit to a customer in exchange for the use of the customer’s private plane; and causing the bank to make improvements on, lease, and pay expenses for properties owned by ANTONUCCI.

The Easy Wealth Line Of Credit

ANTONUCCI used a company he owned, Easy Wealth Group, Ltd. (“Easy Wealth”), to fraudulently obtain funds from The Park Avenue Bank. ANTONUCCI could not authorize the extension of credit by The Park Avenue Bank to his own company without violating the bank’s rules against self-dealing. Accordingly, to mask his interest in Easy Wealth, in early 2006, ANTONUCCI approached an associate and offered to make him president of Easy Wealth (the “Easy Wealth president”), with the understanding that his first order of business would be to apply for a line of credit from The Park Avenue Bank.

The Easy Wealth president applied for a line of credit from The Park Avenue Bank in the amount of $300,000. ANTONUCCI personally approved the line of credit and later increased it to $400,000. ANTONUCCI even assisted the Easy Wealth president in preparing the line of credit application documents. The application as submitted contained numerous misrepresentations, including false statements concerning the Easy Wealth president’s personal assets and a fabricated business plan that contained false information about Easy Wealth’s financial condition and earnings.

After the Easy Wealth president had drawn down the line of credit, ANTONUCCI approached him and demanded that he pay $70,000 to ANTONUCCI in the form of interest-free loans. ANTONUCCI only repaid $50,000 of the money. Easy Wealth ultimately defaulted on the fraudulently-obtained line of credit, causing a loss to The Park Avenue Bank of $400,000.

The Oxygen Overdrafts

ANTONUCCI also approved approximately $8.5 million worth of overdrafts at The Park Avenue Bank to companies (the “Oxygen-related entities”) controlled by a co-conspirator (“CC-1”), who was a close associate of ANTONUCCI’s. Through the Oxygen-related entities, CC-1 brought numerous deposit accounts to The Park Avenue Bank, and submitted, or caused to be submitted, applications for numerous loans from the bank.

On more than ten occasions in 2008 and 2009, ANTONUCCI used CC-1’s private plane to fly for free to, among other places, Florida, Panama, Arizona (so that ANTONUCCI could attend the Super Bowl), and Augusta, Georgia (so that ANTONUCCI could attend the Masters golf tournament). All the while, ANTONUCCI approved over $8 million in overdrafts for the Oxygen-related entities’ various accounts at The Park Avenue Bank. On one occasion in 2009, when a check issued by an Oxygen-related entity bounced, CC-1 communicated to ANTONUCCI that he would not be allowed to use CC-1’s private plane.

The Fishkill Leases

ANTONUCCI also arranged for The Park Avenue Bank to improve, lease, and pay expenses for properties he personally owned. More specifically, over a period of years, ANTONUCCI had The Park Avenue Bank spend more than $1 million to improve, lease, and pay expenses for three properties in which he had an ownership interest: 1042 Main Street, 2 Broad Street, and 48 Jackson Street, all in Fishkill, New York. ANTONUCCI arranged for the bank to make these payments even though it had no legitimate need for two of the three properties.

Fraud Against The NYSBD, FDIC, And TARP

In addition to the corrupt conduct outlined above, ANTONUCCI is also charged with using his position at The Park Avenue Bank to defraud bank regulators by arranging a round-trip transaction designed to deceive the NYSBD and FDIC into believing that ANTONUCCI himself had invested approximately $6.5 million in the bank in an effort to improve its capital position. In truth and in fact, however, ANTONUCCI had fraudulently borrowed from the bank itself the funds that he purportedly invested. More specifically, at ANTONUCCI’s direction, The Park Avenue Bank “loaned” funds totaling $6.5 million to entities with which ANTONUCCI had relationships; those entities transferred the $6.5 million to accounts controlled by ANTONUCCI; and ANTONUCCI then re-deposited the $6.5 million into the bank—claiming he was investing his personal funds in order to recapitalize the bank—in exchange for 308,349 shares of common stock, which represented a 52 percent controlling interest in The Park Avenue Bank’s holding company.

In 2009, when the FDIC began investigating the source of the purported $6.5 million capital infusion, ANTONUCCI lied to FDIC regulators about the true nature of the transaction. ANTONUCCI also provided regulators with documents purporting to reflect that he obtained the $6.5 million from sales of stock, but those sales were actually sham deals designed to disguise the fact that the true source of the funds was The Park Avenue Bank itself.

ANTONUCCI also used the $6.5 million round-trip transaction to support an application for taxpayer rescue funds through TARP. Once again, the bank’s capital position was fraudulently misrepresented on its TARP application. Then, in telephone calls to FDIC regulators reviewing the bank’s TARP application, ANTONUCCI, in an effort to obtain more than $11 million in TARP funds, again falsely represented that he had made a substantial, personal capital contribution to The Park Avenue Bank.

ANTONUCCI also lied to the public about the true nature of the round-trip transaction. In a Park Avenue Bank press release issued February 13, 2009, ANTONUCCI was quoted as stating: “With this new round of capitalization from management, our application for additional capital from the Federal government’s economic stabilization programs [i.e., the TARP] as well as our formal agreement with the regulators to assure stability, service, and liquidity, The Park Avenue Bank is now well positioned to grow strongly in the coming months.”

When ANTONUCCI was advised by the FDIC that it would not recommend approval of The Park Avenue Bank’s TARP application, he withdrew the application voluntarily. During a subsequent interview, ANTONUCCI was quoted as claiming that the bank withdrew its TARP application because of “issues” with the TARP, and the desire to avoid “market perception” that “bad bank[s]” take TARP money. ANTONUCCI also stated: “[I]n conjunction with withdrawing the application, we are also putting additional capital in. The capital is coming primarily from myself and other members of my board. It is the insiders that are investing capital into the bank, so the message to the depositors is that at this point, I don’t need TARP money, I don’t necessarily want TARP money, we are a strong bank, and management is committed to putting capital in as it is needed.”

The Counterfeit Certificate Of Deposit

To conceal the $6.5 million round-trip transaction, ANTONUCCI created a counterfeit Certificate of Deposit (“CD”), in the amount of $2.3 million, purportedly issued by The Park Avenue Bank. More specifically, at ANTONUCCI’s direction, a portion of the $6.5 million borrowed from the Bank was first funneled through accounts associated with U.S. Insurance Group (“USIG”). USIG filed for bankruptcy in April 2009, and at the time listed on its balance sheets a $2.3 million loan from The Park Avenue Bank, which was, in truth and in fact, simply a portion of the $6.5 million round-trip transaction executed by ANTONUCCI to defraud bank regulators and the TARP.

To ensure that the sham nature of the round-trip transaction was not discovered, ANTONUCCI and his co-conspirators engaged in a series of transactions designed to repay the outstanding $2.3 million USIG loan using the funds of another bank depositor, General Employment Enterprise, Inc. (“GEE”). As part of these transactions, and to hide them from GEE’s auditors, ANTONUCCI caused the creation of a 90-day CD at The Park Avenue Bank which purported to represent a $2.3 million investment by GEE. In truth and in fact, however, there was no CD, and the $2.3 million was simply wire transferred from GEE’s account into an account controlled by ANTONUCCI. ANTONUCCI in turn used the money to pay off the outstanding USIG loan. Later, when GEE’s auditors requested a certification from The Park Avenue Bank that the CD existed, ANTONUCCI fraudulently signed such a certification, even though he knew that no CD in fact existed.

The Florida Investment Fraud Scheme

ANTONUCCI also is charged with a scheme to defraud the pastors of the Calvary Springs Chapel in Coral Springs, Florida, who were interested in obtaining investment income for the construction of a new church. ANTONUCCI’s co-conspirator (“CC- 4”) promised the pastors that if they invested $103,940 in the purchase of a bond, CC-4 would borrow up to four times that amount in foreign markets, and pay the pastors back the maturity value of the bond—$604,848—within two to three weeks.

CC-4 instructed the pastors to pay the $103,940 investment to an account at The Park Avenue Bank held in the name of Park Avenue Insurance. That account was in fact owned by ANTONUCCI. After a series of misrepresentations by ANTONUCCI and CC-4, the pastors never received the promised $604,848 return, or the return of their initial investment. Instead, ANTONUCCI and CC-4 simply divided the pastors’ $103,940 investment between themselves.

At approximately 5:00 PM on Friday, March 12, 2010, the NYSBD seized the offices, branches, and assets of The Park Avenue Bank. The FDIC was appointed receiver and will be administering the assets of the bank so as to protect the interests of the depositors. The FDIC has arranged for the sale of The Park Avenue Bank.

New Jersey Resident Indicted on Bank Fraud and Identity Theft Charges March 13, 2010

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Talayah Little, a former TD Bank employee, was charged by indictment with participation in a conspiracy to commit bank fraud and identity theft, as well as bank fraud and aggravated identity theft.

If convicted the defendant faces a maximum possible sentence of 57 years’ imprisonment, a two-year mandatory term of imprisonment, five years supervised release, a $4,000,000 fine, a $1,300 special assessment, and mandatory restitution of $197,4245.

The case was investigated by the United States Postal Inspection Service, the United States Secret Service, and the Federal Bureau of Investigation, with assistance from the Mount Laurel, New Jersey Police Department, and is being prosecuted by Assistant United States Attorney K.T. Newton.

Executive Charged in Multi-Million-Dollar Fraud Case March 2, 2010

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Michael G. Spada was charged yesterday by information with wire fraud, bank fraud, filing a false tax return, and making a false statement to the federal government in a fraud case involving more than $6 million.

Spada is accused of embezzling more than $6 million from his former employer and hiding that embezzlement from both a bank, that extended him a $3.2 million line of credit, and from the Internal Revenue Service. According to the information, Spada is a former controller and chief financial officer of Scannapieco Development Corporation and related companies. The information alleges that Spada embezzled the funds by diverting company checks to his own account and taking more than $400,000 in unauthorized salary between 2000 and 2009.

Spada failed to report most of the embezzled money on his tax returns and lied to IRS agents about his embezzlement during a meeting on June 22, 2009.   This sounds like a classic case of a person buying their own B.S.  As a result, it seems like he lied to his attorney, himself and the IRS which only dug the whole that much deeper.

President of Money Services Company Charged with $12 Million Bank Fraud February 10, 2010

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Robert Egan, the President of Mt. Vernon Money Centers (“MVMC”), has been charged with defrauding Webster Bank out of $12 million in funds that had been entrusted to MVMC. 

According to the Complaint filed today in Manhattan federal court:

Among other money services, MVMC performed the services of replenishing Automated Teller Machines (“ATMs”) for banks and other entities. One of MVMC’s clients was Webster Bank, which has 162 ATMs that MVMC was responsible for stocking. Webster Bank would transfer the funds needed to replenish their ATMs to a bank account to which MVMC had access. MVMC collected this cash, took it to its own cash vault where it filled ATM “canisters” with the cash. MVMC employees then removed the depleted or partially-depleted canisters from Webster ATMs and replaced them with newly filled canisters. The canisters removed from the ATMs by MVMC employees typically contained “residual cash” that was supposed to be returned to Webster Bank, or retained by MVMC for the benefit of Webster.

In January 2010, on eight separate occasions under EGAN’s direction, MVMC falsely represented to Webster Bank that it had returned the cash it had collected from Webster’s ATMs or was retaining the cash in its own vault for the benefit of Webster Bank. In fact, EGAN failed to return over $12 million of Webster Bank’s money to Webster Bank, and instead misappropriated the money for use in MVMC’s business operations.

On January 29, 2010, EGAN admitted that he had taken over $12 million of Webster Bank’s money without its knowledge or authorization. He stated that he used the money to fund other aspects of MVMC’s business, and to fund “shortfalls” with respect to other MVMC clients.

He is charged with one count of conspiracy to commit bank fraud.

Several people charged with defrauding bank of $6.2 Million January 31, 2010

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SUSAN A. CURTIS, her husband GARY J. STOCKING, both of Naugatuck, Conn. and CURTIS’ former husband, KEVIN W. CAFFREY, of Wolcott, have been charged with one count of bank fraud and one count of conspiracy to commit bank fraud.  The Government alleges that CURTIS was employed in the Property Services Division of Webster Bank with responsibilities that included negotiating and managing bank property leases where Webster Bank was a landlord or tenant. CURTIS, STOCKING and CAFFREY established two companies called New House, LLC and Equity Realty, LLC, which CURTIS falsely represented to Webster Bank’s Vendor Management Department were landlords, an exempted category for due diligence and annual review.

CURTIS then submitted paperwork to Webster Bank’s Accounts Payable Department in which she falsely represented that New House and Equity Realty were due a fee in approximately 109 real estate related transactions involving 67 properties. As a result, Webster Bank made payments of approximately $5.04 million to New House and Equity Realty. CURTIS also caused a landlord, who was a lessor of property leased to Webster Bank, to send approximately $703,620 in lease improvement payments directly to CURTIS. CURTIS and STOCKING are also alleged to have altered the checks from the landlord to make them payable to Webster Bank c/o Equity Realty, and then deposited the checks to an Equity Realty account at another bank.

As if that wasn’t bad enough, CURTIS also falsely represented to other landlords or their counsel, who were dealing with Webster Bank, that a $450,000 check for property improvements should be paid directly to Equity Realty c/o Webster Bank. CURTIS and STOCKING then deposited the check into the Equity Realty bank account.

This is one very complex scheme.  Someone needs to fall on the sword here.  The question is, who is going to do it?  Rarely does both the husband and wife go down on the charges.  However, this case also involves the ex which makes things interesting.