Kentucky businessman gets 12 years prison for 'vortex of fraud'

Reuters News
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Posted: Jun 04, 2015 4:54 PM

By Joseph Ax

NEW YORK (Reuters) - A Kentucky businessman was sentenced on Thursday to 12 years in federal prison for a series of massive frauds, including a $53 million tax scheme, the bribing of bank officials and the defrauding of bank and insurance regulators.

Wilbur Huff had pleaded guilty in December to what Manhattan U.S. Attorney Preet Bharara called a "vortex of fraud."

On Thursday, U.S. District Judge Naomi Reice Buchwald in New York said Huff had a "staggering" history of wrongdoing that began in the 1990s and continued even after he pleaded guilty in a separate mail fraud case in 2003.

"Mr. Huff, you are not from New York, so perhaps you are not familiar with the term 'chutzpah,'" Buchwald said, adding that Huff was a perfect example of the word.

Thursday's case stemmed from an investigation into Park Avenue Bank, which failed in March 2010. Its former president, Charles Antonucci, became the first person ever convicted of stealing bank bailout funds from the U.S. government's Troubled Asset Relief Program, or TARP, when he pleaded guilty in 2010.

Prosecutors said Huff conspired with Antonucci and another bank executive, Matthew Morris, to bolster the bank's capital by faking a $6.5 million cash infusion. That imaginary investment facilitated Antonucci's ability to secure TARP money, according to authorities.

In addition, Huff bribed Antonucci and Morris to send him fake letters of credit that caused Park Avenue Bank to loan his companies millions of dollars, prosecutors said.

Separately, Huff controlled O2HR, a Florida payroll management company, from 2008 to 2010. According to prosecutors, he stole client money paid to O2HR and used it for his own personal expenses, including designer clothing and luxury cars.

O2HR owed $5 million to an Oklahoma insurance company, Providence P&C, that provided worker's compensation insurance.

Instead of repaying the debt, Huff conspired with Morris, Antonucci and Allen Reichman, an investment banker in New York, to fraudulently obtain a $30 million loan from Reichman's firm, using the insurance company's own assets as collateral, so Antonucci could buy Providence P&C.

The men then hid the source of the financing from state regulators to skirt Oklahoma law and looted Providence P&C's assets, prosecutors said. Like Park Avenue Bank, the insurance company eventually became insolvent.

Morris pleaded guilty in October 2013, while Reichman pleaded guilty in February.

The case is U.S. v. Huff et al., U.S. District Court for the Southern District of New York, No. 12-750.

(Reporting by Joseph Ax)