Former Wilmington Trust president Robert Harra Jr. was ordered released on bail Thursday after pleading not guilty to fraud and conspiracy charges stemming from an ongoing federal investigation into the collapse of the century-old financial institution.
Harra, 66, said little during his initial court appearance, only acknowledging that he understood the charges and maximum penalties he faces as outlined to him by U.S. Magistrate Judge Christopher Burke.
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But defense attorney Michael Kelly told Burke that Harra "vehemently maintains his innocence."
"He is a pillar of the community," Kelly added.
As a condition of his release, Harra was ordered to post a $25,000 unsecured bond and surrender his passport, even though Kelly assured the judge that Harra is not a flight risk.
Harra is charged with conspiracy, securities fraud and making false statements to federal regulators and false entries in banking records. He faces up to 225 years in prison and $16.25 million in fines if convicted on all counts.
Harra is the highest-ranking former Wilmington Trust official to date to be charged in the investigation, which already has netted several guilty pleas. He is one of four high-ranking former Wilmington Trust executives, including former chief financial officer David Gibson, 58, named in a superseding indictment issued by a federal grand jury earlier this month.
The indictment also revised and expanded charges against William B. North, 55, the bank's former chief credit officer, and Kevyn Rakowski, 61, who served as controller. Both had pleaded not guilty in response to a previous indictment in May.
Authorities allege that the former bank executives concealed information about Wilmington Trust's deteriorating commercial real estate loan portfolio, which led to its downfall and hasty acquisition by M&T Bank Corp. in 2011.
All of the defendants have maintained their innocence.
"This guy is squeaky clean," Kelly said after Harra's arraignment.
"I haven't seen a thing to suggest any wrongdoing on the part of Mr. Harra, not a thing," he added.
Authorities allege, however, that the bank failed to disclose to regulators its practice of "waiving" matured loans designated as current for interest and in the process of being extended from the reporting requirements for past due loans. The indictment cites several emails, dating as far back 2007, in which North expressed concerns about the amount of loans being waived from the reporting requirements.
As commercial real estate borrowers began experiencing financial difficulties during the economic downturn in 2008, Wilmington Trust officials began providing hundreds of millions of dollars in supplemental financing, prosecutors allege. The supplemental financing allowed borrowers, and in some instances the bank itself, to make monthly interest payments on matured loans when borrowers otherwise may not have been able or willing to make such payments, prosecutors said.
According to the indictment, Wilmington Trust officials reported only $10.8 million in commercial loans that were 90 days or more past due at the end of 2009, concealing more than $333 million in past due loans subject to the waiver practice.
In addition to the criminal investigation, several former Wilmington Trust shareholders have filed a federal class-action securities lawsuit against Harra and other former bank officers. The Securities and Exchange Commission also filed a civil fraud complaint earlier this year against Harra, Gibson, North and Rakowski.