An Englewood, New Jersey-based real estate developer today admitted his role in a conspiracy to illegally obtain nominee loans from Mariner’s Bank, U.S. Attorney Craig Carpenito announced.
Officials say James Demetrakis, 79, pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to an information charging him with one count of conspiracy to make false entries to deceive a financial institution and the FDIC.
According to documents filed in this case, a related case against Fred Daibes and Michael McManus, and statements made in court: Demetrakis’ longtime business partner, Daibes, was the founder and, until April 2011, chairman of the board of directors, at Mariner’s Bank.
The bank was subject to federal banking regulations that placed limits on the amount of money that the bank could lend to a single borrower. Between January 2008 and December 2013, Demetrakis conspired with Daibes and others to orchestrate a nominee loan scheme designed to circumvent the lending limits by ensuring that millions of dollars in loans flowed from Mariner’s Bank to the nominees to Daibes, while concealing from both Mariner’s Bank and the FDIC Daibes’ beneficial interests in those loans.
Offstage Demetrakis served as the nominee for a $1.8 million line of credit and recruited two of his relatives to serve as nominees for a $2.625 million loan. After receiving the proceeds of the loans, Demetrakis and the other nominees distributed these monies to Daibes. Daibes and the nominees, including Demetrakis, failed to disclose to Mariner’s Bank that Daibes arranged to make both the interest and principal payments on the loans.
The nominee loans became delinquent on certain occasions when Daibes failed to give the nominees, including Demetrakis, the funds to make the monthly payments. After the FDIC began an investigation into one of the loans, Daibes, McManus, and others created and submitted to the FDIC a false, backdated sales contract to make it appear as though Demetrakis had obtained the $1.8 million loan from Mariner’s Bank in order to pay Daibes for his interest in a real estate venture.
According to authorities, Daibes and McManus were indicted Oct. 30, 2018, on conspiracy and bank fraud charges, which remain pending. The charges and allegations against them are merely accusations, and they are presumed innocent unless and until proven guilty.
The conspiracy charge to which Demetrakis pleaded guilty carries a statutory maximum of five years in prison and a maximum fine of $250,000.
Sentencing is scheduled for July 23rd.