Federal banking regulators have charged an executive of Hunt Valley-based Eastern Savings Bank with improperly altering documents for $3.25 million in loans approved by a Pennsylvania financial institution.
In documents released Tuesday, the Office of Thrift Supervision accuses Jonathan I. Feldman, Eastern Savings' senior vice president, of receiving financial gain or benefit from "misconduct involving personal dishonesty" and engaging in unsafe or unsound practices.
The OTS is seeking to remove Feldman from Eastern Savings and prohibit his involvement with Eastern Savings and other banks. The OTS also fined Feldman $125,000.
According to the OTS, ESSA Bank & Trust, based in Stroudsburg, Pa., approved four commercial loans in March 2006 totaling $3.25 million to Feldman and three other members of Ivy Ridge LLC for a residential real estate development. As a condition of the loans, ESSA Bank required Feldman and the other members to personally guarantee the loans, which were set to mature in March 2008.
Ivy Ridge requested an extension, and ESSA Bank asked Feldman and his partners to renew and extend their personal guarantees. It approved the extension, believing the personal guarantees were renewed, according to the OTS.
But Feldman altered his "restated commercial guaranty" document without ESSA Bank's knowledge or consent so that he would be released from all personal liability for the loans, the OTS alleges.
The OTS accuses Feldman of concealing the changes by "having the changes typed in an identical type size and font as the original restated guaranty," according to the documents. Moreover, the OTS says Feldman duplicated the ESSA Bank's "internal document management system authentication and identification mark" in the altered guaranty document.
When Ivy Ridge defaulted on the loans in August 2008, ESSA Bank approached Feldman to obtain payment. At that time, Feldman disclosed to the bank that he had modified the guaranty document, according to the OTS.
As a result, Feldman said he would not make any payment because "his restated guaranty, as modified, released him as a guarantor of the loans," according to the documents.
ESSA Bank will take a loss of between $1 million and $1.5 million on the loans, according to the OTS. Gary S. Olson, president and chief executive at ESSA Bank, declined to comment.
Calls to Feldman and Yaakov S. Neuberger, chairman of the bank's executive committee, were not returned Tuesday.
Because Feldman is an officer with Eastern Savings, the OTS has authority over him, according to the documents.
Eastern Savings remains under intense federal supervision. The OTS issued a "cease and desist" order in February 2009 against the bank for engaging in "unsafe and unsound practices" that led to high amount of "delinquent and defaulted loans."
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