Bank Chairman Used Bank Funds to Renovate Evanston Home, Attorney General Says

Two Evanston residents were formally charged Tuesday with defrauding the federal government of more than $70 million through Wilmette’s failed Premier Bank, according to a press release from the Attorney General’s Office. 

Former Premier Bank chairman Zulfikar Esmail, 70, and his wife, Shamim Esmail, 65, a senior officer and general counsel of the bank at 1210 Central Ave., were arraigned in Cook County Criminal Court Tuesday, along with two other people, according to the release. The other defendants are Robert McCarty, 51, of Geneva, and William Brannin, 53, of Chicago. 

The four defendants allegedly misrepresented the bank’s condition to authorities beginning in 2006, in order to procure money from the Troubled Asset Relief Program (TARP) and the Federal Deposit Insurance Corporation (FDIC)—then pocketed the money, according to the indictment. All told, they defrauded TARP of $6.8 million and cost the FDIC $64.1 million when the bank failed in March 2012, the release says. 

“The perpetrators of this criminal enterprise are charged with using taxpayer funds to further their own shakedown scheme at time when our country was on the brink of disaster,” Attorney General Lisa Madigan said in the release. “Their brazen actions to cover up this fraudulent scheme led to the failure of Premier Bank at the expense of its trusting customers and American taxpayers.” 

Esmail pled not guilty at the hearing Tuesday, according to Crain's Chicago Business. 

"There is no evidence of wrongdoing by Dr. Esmail and this is overreaching by the Illinois attorney general's office," Gair told Crain's.

The Attorney General's Office alleges bank officers submitted multiple fraudulent reports to the Illinois Department of Financial and Professional Regulation between 2006 and 2012, misrepresesenting the actual condition of the bank’s loans and lines of credit, according to the indictment.

Meanwhile, Zulfikar Esmail allegedly solicited and demanded bribes in connection with applications made for business loans and lines of credits to several grocery stores around the area, according to the release. He also demanded that his children be given ownership stakes in the stores in return for the loans or lines of credit, the release said. 

Esmail also had an underground tunnel constructed at his home, among other improvements, and directed the contractor to prepare invoices that showed the work was done at the bank instead, according to the release. 

As TARP Special Inspector General Christy Romero explained it in the release, Esmail used Premier Bank “as his personal fiefdom” to exploit federal funds for criminal enterprises, “while fattening his own pockets at the expense of customers and federal taxpayers.”

Federal agents arrested the Esmails, McCarty and Brannin on July 10 at their homes, according to the release. Tuesday’s charges are the first criminal enterprise charges brought against officers and directors of a bank receiving TARP funds, according to TARP special inspector general Christy Romero.  

“The FDIC Office of Inspector General is committed to investigating and prosecuting cases where trusted insiders abuse their positions and engage in activities that harm their institutions,” FDIC special agent John Lucas said in the release. “We will continue to pursue such threats to the safety and soundness of FDIC-insured institutions throughout the country.”

Zulfikar Esmail was charged with financial institution fraud, organizing a financial crimes enterprise, theft by deception, commercial bribery of a financial institution and conspiracy to commit a financial crime. If convicted, he could face a mandatory prison sentence of six to 30 years, among other punishments.

Shamim Esmail, Robert McCarty and William Brannin were each charged with financial institution fraud, continuing a financial crimes enterprise, conspiracy to commit a financial crime and theft by deception, according to the release. If convicted, they too could face a mandatory prison sentence of six to 30 years.

All four were released on bond Tuesday, the release said.

The FDIC closed Premier Bank on March 23, 2012. At the time, it had $268.7 million in total assets and $199.0 million in total deposits, which were assumed by International Bank of Chicago, according to the FDIC.