Pa. woman admits $1.1M minority-owned bank fraud

AP News
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Posted: Apr 06, 2011 5:23 PM
Pa. woman admits $1.1M minority-owned bank fraud

A woman pleaded guilty Wednesday to bank fraud and money laundering for taking advantage of an electronic banking glitch that enabled her to make $1.1 million in overdraft withdrawals, which regulators have said contributed to the failure of what once was Pittsburgh's only minority-owned bank.

Jammie Harris, 46, of Pittsburgh, learned of the glitch at Dwelling House Savings and Loan from another woman and made 272 fraudulent transactions from February to December 2008, blowing the money on drugs, clubbing and other luxuries _ though she also bought a house for her mother, Assistant U.S. Attorney Paul Hull told the federal judge who accepted Harris' guilty plea.

"Other witnesses would testify that Miss Harris lived the high life with newfound wealth" even though she was unemployed at the time, Hull said, in explaining the evidence against Harris to Senior U.S. District Judge Alan Bloch.

Harris corrected Hull by stressing that her family didn't know where she got the money _ "I told my family I hit the lottery," she said _ but otherwise agreed with the prosecutor's description of her crimes.

The fraud prosecutors say was perpetrated by Harris and another woman who was charged in the case account for roughly $2 million of the more than $3 million the 119-year-old thrift lost before it was shut down and forced into receivership by the Federal Deposit Insurance Corp. in 2009. The minority-owned bank was located in Pittsburgh's historically black Hill District and had been established to provide loans to those who could not get them elsewhere. It was a tiny, albeit significant, city institution, with just $3.5 million in capital at the end of 2007, which is why it couldn't absorb the losses.

Harris, who is black, didn't comment after her guilty plea and her defense attorney, Patrick Thomassey, said he doubts she appreciates the impact she had on the bank.

"I don't think so, really. I don't think she realizes it," Thomassey said of Harris, a petty criminal with a record of drug and retail theft charges who was indicted in the bank fraud in 2010.

Harris "just blew all the money," much of it on cocaine, her attorney said, though she is now taking responsibility for her addiction. "That's a lot of money to go through for those reasons, but she did."

Hull told the judge that Harris began scamming the bank after learning of the glitch from Elexa Manos-Becton, of Coraopolis, who was indicted in January on charges she siphoned more than $900,000 from Dwelling House using the same scheme. Manos-Becton has pleaded not guilty.

Hull wouldn't say who else might be responsible for the rest of the bank's losses, but he confirmed that the investigation was continuing and said Harris and Manos-Becton were the only people charged "so far."

Hull wouldn't say how Manos-Becton learned that Dwelling House wasn't properly rejecting overdraft "automatic clearing house" transactions, in which financial institutions transfer money to one another.

The women used that glitch to make hundreds of overdraft transfers using PayPal, a secure system used to transfer funds for online purchases and other transactions, from Dwelling House to other bank or credit card accounts they controlled. The women then spent the money that had been deposited into their other accounts _ leaving Dwelling House to absorb the losses when the sham transactions came to light in 2008 and 2009.

Harris faces up to 40 years in prison at her sentencing, which is scheduled for Aug. 11, though her sentence will be driven by advisory guidelines taking into account the seriousness of her crime and her criminal record. Harris' offense gravity score was enhanced by the fact that she stole more than $1 million and she will not be eligible for a sentence of merely probation, Hull said.

Because Dwelling House is defunct, any restitution she might pay would go to the FDIC.