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United States v. Wilmington Trust Corp.

United States District Court, D. Delaware

September 22, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
WILMINGTON TRUST CORPORATION, DAVID R. GIBSON, ROBERV. A. HARRA, WILLIAM NORTH, and KEVYN RAKOWSKI, Defendants.

          MEMORANDUM ORDER

         Presently before the Court is Defendants' Motion Regarding Potential Presentation of False Testimony to the Grand Jury (D.I. 390) and related briefing (D.I. 400, 403, 498, 502, 504). In their motion, Defendants request discovery to determine whether false testimony was knowingly presented to the grand jury that returned the Third Superseding Indictment. Defendants also request that I hold an evidentiary hearing on this matter. For the reasons that follow, Defendants' Motion requesting discovery and an evidentiary hearing is denied.

         Defendants allege the Government may have presented false testimony to the grand jury that returned the original indictment when it elicited the following testimony from an FBI agent:

Q: Did you have an opportunity or your fellow agents have an opportunity to ask Mr. Corkery and Mr. Fomunyan whether they were aware that the bank engaged in a practice of waiving loans from past due reporting?
A: Yes.
Q: And what was their response?
A: Neither of the two were aware of the practice.

(D.I. 393, Exh. 2 at pp. 78-79). Defendants argue that the agent's response, "Neither of the two were aware of the practice, " is inconsistent with an FBI interview report from 2013. The 2013 report states in part, "FOMUNYAN recalled that WT never reported their matured loans but instead had a 'perpetual extension' process where by loans were extended with no formal process or analysis." (D.I. 393, Exh. 1 at p. 2). Defendants argue that this apparent inconsistency between the grand jury testimony and the 2013 interview report suggests the Government may have secured the indictment based on the knowing presentation of false testimony to the grand jury. (D.I. 391 at 2). Citing Bank of Nova Scotia v. United States, 487 U.S. 250 (1988), Defendants argue the Court may be required to dismiss the Third Superseding Indictment if the Government did present false testimony. (Id. at 5).

         The Government responds that Defendants "mischaracterize[] a single question-and-answer exchange" before the grand jury. (D.I. 400 at 6). The Government argues that the reference in the 2013 interview report to Mr. Fomunyam's awareness of matured loans was made in the context of discussing information he learned during credit file reviews. (Id.). According to the Government, these credit file reviews occurred three months after Wilmington Trust's capital raise that is the subject of the indictment. (Id. at 8). Further, the Government cites to a portion of the 2013 interview report, which the Government argues demonstrates that Mr. Fomunyam stated he had no knowledge of the Waiver Practice. (Id. at 7). At the hearing I held on September 16, 2017, the Government proffered that Mr. Fomunyam's interview statement[1] is related to "four specific findings" made in the December 2010 examination report. (D.I. 516 at 214:19-23).

         After having reviewed the briefing and Exhibits, I find that the agent's grand jury testimony is consistent with Mr. Fomunyam's interview statement. First, it appears the grand jury testimony and the interview report refer to two entirely different issues. In particular, the grand jury testimony appears to refer to Mr. Fomunyam's knowledge of Wilmington Trust's practice of waiving its matured loans from public reporting-that is, the Waiver Practice.[2] The interview report, on the other hand, appears to refer to Wilmington Trust's reporting of its matured loans directly to Mr. Fomunyam during the Federal Reserve's examination of the bank.

         This interpretation is directly supported by the 2013 interview report. It is also consistent with the Government's explanation of the report. The first sentence under the "Matured Loans" heading must be read together with the two sentences that follow it. The report states in relevant part,

FOMUNYAN recalled that WT never reported their matured loans but instead had a 'perpetual extension' process where by loans were extended with no formal process or analysis. FOMUNYAN never received any information (i.e. spreadsheet of matured loans) from WT listing their matured loans but instead learned of the practice from reading a memo or reviewing a credit file. FOMUNYAN asked WT to provide information on their matured loans, Working Capital Lines of Credit (WCLOC) and Ten Percent Rule (TPR) Loans but was always told that they couldn't locate the information in their system.

(D.I. 393, Exh. 1 at p. 2). When read together, these sentences can be reasonably understood to mean that Wilmington Trust allegedly never disclosed its matured loans directly to Mr. Fomunyam. Nowhere in this portion of the interview report is there mention of Wilmington Trust's reporting of matured loans in public filings.

         In contrast, the agent's testimony before the grand jury refers to Wilmington Trust's "practice of waiving loans from past due reporting." (D.I. 393, Exh. 2 at p. 79). It is clear from the eighty-four-page transcript (D.I. 498, Exh. A) produced by the Government that the agent's grand jury testimony related almost entirely to Wilmington Trust's public reporting obligations and to its practice of omitting matured loans from public filings. Thus, it is apparent that the question-and-answer before the grand jury regarding Mr. Fomunyam's knowledge of the bank "waiving loans from past due reporting" refers to his knowledge of the bank's reporting of those loans in public filings. I therefore do not believe the statements conflict.

         I am not persuaded by Defendants' argument that Mr. Fomunyam's interview statement about what the Federal Reserve would have done "if the true extent of the aforementioned practice was known to the FRB in October of 2009" shows that he was aware of the Waiver Practice. (D.I. 403 at 3 n. 3). The portion of the interview report preceding that statement shows that the "aforementioned practice" refers to the practice of renewing matured loans without a formal process, not to the practice of waiving loans from past due reporting. (See D.I. 393, Exh. 1 at pp. 2-3). Although the interview report refers to "waived" loans (see id.), it is clear that any such reference does not relate to loans "waived" from public ...


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