Bank of Saipan’s former chairman of the board and chief executive officer was arrested for allegedly conspiring to defraud the bank of over $6.6 million.
Tomas B. Aldan, who also chairs the CNMI government’s Board of Public Lands, Bert Douglas Montgomery, Dusean Berkich and Michael T. Wilson were indicted in federal court.
The Federal Bureau of Investigation arrested Aldan and Montgomery on Friday. Wilson was arrested in Plano, Texas while Berkich remained at large as of Friday.
The four defendants were charged with conspiracy to commit wire fraud.
In addition, Aldan was charged with one count of wire fraud, Montgomery with four counts of wire fraud, Berkich with three counts of wire fraud, and Wilson with three counts of wire fraud.
Each count of the indictment carries a maximum imprisonment of five years, three years of supervised release and a fine.
During Friday’s hearing, Aldan and Montgomery, who were represented by attorneys Joseph Arriola and Bruce Berline , waived reading of the indictment. Both defendants pleaded innocent of the charges.
U.S. District Court Judge Alex R. Munson set the jury trial for July 1. The judge allowed the 56-year-old Aldan to post a $250,000 unsecured bond with the condition that he surrender his travel documents.
The 63-year-old Montgomery was previously held as a material witness in connection with the grand jury proceedings.
Munson set the bail for Montgomery at $250,000 bond secured by $25,000 in cash.
Assistant U.S. Attorney John Rice said the indictment was a result of the joint efforts of the FBI and U.S. Internal Revenue Service.
Bank of Saipan in its press statement Friday stated that it “appreciates the federal authorities’ efforts” and that the bank has cooperated completely with the investigators.
“The bank will not allow this matter to deter the bank from its mission—to provide much needed financial resources to assist the people of the CNMI and to strengthen the local community. As the only local bank with branches on Saipan, Tinian and Rota, the bank is committed to the commonwealth,” the bank said.
According to court papers filed by Assistant U.S. Attorney Patrick J. Smith, Montgomery and Berkich, together with other persons, fraudulently sought to obtain control of the bank last August through Montgomery’s purchase of the majority of the bank’s common stock.
Montgomery, Berkich and other persons allegedly deceived the bank, the selling shareholders, and the CNMI commissioner of banking with respect to Montgomery’s status as a bona fide purchaser of the bank by allegedly misrepresenting Montgomery’s source of funds for the stock purchase transactions.
To facilitate their plan to fraudulently obtain the bank’s money and property, Montgomery and Berkich secretly offered Aldan money and “other things of value,” the prosecutors said.
The offers to Aldan included a higher salary, quarterly bonuses, part ownership of the bank, part ownership of a company controlled by Montgomery and Berkich, and arranging an illegal $504,666 loan from the bank.
In return, Aldan allegedly authorized, on behalf of the bank, numerous transactions for Montgomery and Berkich that were necessary to carry out the scheme, and concealed those transactions from the bank’s board of directors.
As of Nov. 2001, both through Aldan and through the establishment of an “International Affairs Department,” Montgomery and Berkich controlled Bank of Saipan.
Upon gaining control of the bank, Montgomery and Berkich, with the assistance of Aldan, allegedly obtained the bank’s money and property for themselves and others, including Wilson, by causing the bank to make $5 million in loans to the Texas-based Sweven Systems and a $260,000 loan to Montgomery.
Montgomery and Berkich, with the assistance of Aldan, allegedly defrauded a customer of the bank out of approximately $209,980, and defrauded the bank out of an additional $240,000 in connection with transactions relating to the bank customer.
The four defendants in carrying out their scheme to defraud, unlawfully obtained money and property from the bank and its customer totaling at least $6.6 million, court documents alleged.
In order to induce the bank to provide funding for the stock purchase transaction, Montgomery, Berkich and others allegedly falsely represented that Montgomery owned a brokerage account in the name of United Forex Exchange.
Montgomery and Berkich purported to cause the UFX Brokerage Account to be assigned to the bank, and further represented that, upon liquidation, the assets in the UFX would be sufficient to reimburse the bank for funds it advanced to pay for Montgomery’s purchase of the bank’s stock from the selling shareholders.
On Dec. 3, 2001, the bank, in transactions authorized by Aldan, advanced $3.6 million to several of the selling shareholders.
These advances, court papers said, permitted Montgomery and Berkich to use the bank’s funds to pay for the stock purchase in the absence of any loan agreement, without the approval of the bank’s board of directors, and without providing the bank with sufficient funds or security.
The liquidation of the UFX Brokerage Account yielded $2.8 million. Montgomery and Berkich caused only $2.6 million of those proceeds to be transferred to the bank to repay the advances to the selling shareholders.
After transferring to the bank another $500,000 that Montgomery and Berkich obtained from a bank customer, the bank was left with a shortfall between the advances to the selling shareholders and the funds repaid by Montgomery and Berkich of approximately $487,000.
It was further alleged that in Feb. 2002, in an effort to repay United Forex Exchange, Montgomery and Berkich fraudulently sought to use the bank’s assets to secure a loan for their personal benefit.
Montgomery, Berkich and others also allegedly caused the bank, in transactions authorized by Aldan, to transfer assets from the bank’s existing investment account to a new brokerage account at D.A. Davidson & Co., a broker-dealer.
Montgomery, Berkich and others then attempted to use that account as security for a loan to Montgomery from a lender in Dallas, Texas. At no time did the bank’s board of directors approve the establishment of a new brokerage account at D.A. Davidson & Co. nor any pledge of the bank’s assets to secure a personal loan to Montgomery, the prosecutors alleged.
In Nov. 2001, Montgomery, Berkich and Wilson urged Aldan and certain other employees of Bank of Saipan to fund $500,000 of the Sweven Systems loan for the purpose of enabling Sweven Systems to go forward with its acquisition of two credit card processing companies.
Montgomery, Berkich and Wilson allegedly falsely represented that the loan would be secured by $600,000 in cash owned and controlled by Sweven Systems on deposit at another credit card processing company.
On Nov. 8, 2001, the bank wired $500,000 to Sweven Systems’ bank in Plano, Texas. Wilson fraudulently caused Sweven Systems to disburse the majority of these funds to pay for a variety of expenses unrelated to the acquisition of credit card processing companies.
In early Jan. 2002, Montgomery, Berkich and Wilson urged Aldan and certain other officers of the bank to loan an additional $4.5 million to Sweven Systems so that it could complete its acquisition of two credit card processing companies.
Aldan approved the $4.5 million loan to Sweven Systems and caused the funds to be transferred by wire from the bank to the escrow account of Sweven System’s attorneys in Texas.
In Feb. 2002, Montgomery applied for a $260,000 loan from the bank and Aldan approved the loan. At Aldan’s direction, the bank transferred $260,000 to an account at the bank in Montgomery’s name.
In Jan. 2002, Aldan himself applied to Bank of Saipan for a loan. Montgomery purporting to act on behalf of the bank, directed that $504,666 in loan proceeds be disbursed to Aldan.
In violation of Aldan’s duty to disclose this transaction, as well as the legal requirement that two-thirds of disinterested directors approve such loan, Aldan and Montgomery failed to disclose it to the board, court papers said.
