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Once-respected Keys banker Williams out of prison after time for fraud

This IberiaBank branch around mile marker 54 bayside in Marathon used to be the headquarters for First National Bank of the Florida Keys, then Orion Bank, before Jerry Williams moved operations to Southwest Florida. IberiaBank took over Orion when federal authorities seized Orion.
This IberiaBank branch around mile marker 54 bayside in Marathon used to be the headquarters for First National Bank of the Florida Keys, then Orion Bank, before Jerry Williams moved operations to Southwest Florida. IberiaBank took over Orion when federal authorities seized Orion. Keynoter

A fallen Florida Keys and Naples banker has moved from a prison camp in Alabama to a halfway house to prepare for life on the outside.

Jerry Williams, the former chief executive of Orion Bank, founded in Marathon as First National Bank of the Florida Keys, is serving out the last six months of a six-year sentence for his involvement in a bank fraud conspiracy that helped bring down the once-admired community bank.

Williams earned good-conduct credit and had already served jail time before he entered the prison camp, shortening the actual time served.

He was at a minimum-security federal prison camp in Montgomery. He’s now at a residential re-entry center, or halfway house, in a different state, where he’ll be closely monitored but have more freedom to come and go for work, counseling, visits or recreation. He’s scheduled to be released Oct. 30. Williams transferred to his transitional home April 20.

Re-entry centers help inmates find jobs and offer job training if needed. Offenders are expected to be employed 40 hours a week within 15 days of their arrival, according to the Federal Bureau of Prisons’ website.

Asked if he knew Williams’ plans for the future or whether he planned to return to Naples, one of his defense attorneys, William Sullivan said, “I don’t, but his family is in Nashville.”

Orion Bank, which started as First National Bank of the Florida Keys in Marathon 1976, had moved to Naples and grown to 23 branches by the time federal regulators closed it in late 2009.

In June 2012, Williams, now 57, was sentenced in federal court in Fort Myers after a four-hour hearing. Under a plea agreement, Williams faced a sentence of up to 15 years on three counts involving bank fraud.

The fraud

Williams admitted to orchestrating a complex scheme that illegally raised more capital for Orion, which has since been taken over by IberiaBank, and sold off bad loans to a borrower to make his failing bank appear in better financial shape than it was.

More than $80 million in loans were made to Francesco Mileto, who was over his loan limit, with $15 million returned to the bank for the illegal purchase of stock.

Williams’ high-powered attorneys fought for a lighter sentence, arguing his crimes were mistakes he made in a panic to save his bank. The judge who delivered the sentence saw it another way, saying his actions were more about greed and saving himself than saving the bank.

Orion employees and other shareholders lost millions when the bank failed and their stock became worthless. Orion bank lost more than $20 million.

Williams “probably is still blaming everyone else,” said Patrick Miller, a former Orion senior vice president. “Based on the fact he is barred from banking, certainly hope he never has the chance to do it again.”

Williams apologized in court, telling the judge he took full responsibility for his actions and his mistakes. “I’m deeply saddened. I deeply regret my conduct,” he said with his back to the employees and other shareholders sitting in the courtroom.

Williams’ three co-conspirators received sentences ranging from two years to five years and five months. His sentence included 50 hours of community service and supervised release for three years after he’s released from prison.

At his sentencing Williams agreed to pay more than $5.7 million to Orion shareholders he sold stock to months before the bank failed. But that restitution left out hundreds of other investors, who lost millions. Many of them were bank employees.

A judge also ordered Williams to pay more than $31 million in restitution to the Federal Deposit Insurance Corp. for his leading role in the bank fraud conspiracy, based on the losses the agency suffered when it took over the bank’s fraudulent loans after selling most of Orion’s assets to IberiaBank.

The FDIC, which insures bank deposits, covers its losses with the premiums it receives from its member banks and thrifts. It receives no government money.

Restitution?

Asked if Williams has been able to pay any restitution and how he plans to pay restitution when he gets out of prison, Sullivan said, “Thirty-six million? Not happening.”

It’s unclear whether Williams or his co-conspirators have paid any restitution to the FDIC. The agency’s records on restitution payments from criminal defendants are not public record.

The FDIC has recouped some of its losses from Orion Bank in other ways:

▪ In August 2014 the FDIC reached an agreement with West Palm Beach-based law firm Nason, Yeager, Gerson, White & Lioce P.A. and two of its attorneys, who it alleged approved the fraudulent loans made to Mileto despite “a slew of glaring red flags.” The FDIC collected almost $2.5 million.

▪ In October 2014 the FDIC struck a compromise with James Aultman, Earl Holland and Brian Schmitt, three of the bank’s former Keys directors who it alleged allowed Williams to “drive the bank into failure.” The FDIC received more than $1.22 million from the directors and more than $2.48 million from their insurer, Progressive Casualty Insurance Co., as part of a $3.71 million agreement.

▪ In July 2015 the FDIC negotiated a settlement with Crowe Horwath LLP, an outside public accounting firm that did business for the bank, avoiding a lawsuit. The FDIC received $2 million.

The FDIC also reached an agreement with two of the bank’s insurers. U.S. Specialty Insurance agreed to pay $1.65 million, while Hanover Insurance Co. settled for $175,000, ending a federal lawsuit filed against them in November 2015.

The FDIC claimed that Orion Bancorp Inc. and its subsidiary bank held fidelity bonds from the two insurers that covered the wrongful acts of the bank’s employees at the time of the fraud.

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