A Kentucky man will spend the next 12 years in federal prison for leading a spectacularly massive scheme that involved defrauding the Internal Revenue Service of $53 million, bribing senior bank executives, the fraudulent purchase of an insurance company, and the defrauding of insurance regulators and an investment bank.
Wilbur Huff, 53, was sentenced to 12 years in federal prison and ordered to pay more than $108 million in restitution for his role in a scheme that led to the first person being charged with stealing from the government’s Troubled Asset Relief Program.
According to a release from the Special Inspector General for the Troubled Asset Relief Program, Huff was a businessman who controlled numerous entities located throughout the country. Huff controlled the companies and their finances, using them to orchestrate a $53 million fraud on the IRS and other schemes, spanning four states, involving tax violations, bank bribery, fraud on bank regulators, and the fraudulent purchase of an insurance company.
As part of his crimes, Huff concealed his control of his companies by installing other individuals to oversee the companies’ day-to-day functions and to serve as the companies’ titular owners, directors, or officers.
According to SIGTARP, Huff also maintained a corrupt relationship with Park Avenue Bank and its executives, Charles Antonucci, the president and chief executive officer, and Matthew Morris, the senior vice president.
In 2010, Antonucci became the first person charged with defrauding TARP for his role in the scheme.
Huff’s role in the massive scheme was wide-ranging.
According to SIGTARP, from 2007 to 2010, Huff engaged in a “massive multifaceted conspiracy” that involved bribing executives of Park Avenue Bank, defrauding bank regulators and the board and shareholders of a publicly traded company, and fraudulently purchasing an Oklahoma insurance company.
Huff paid bribes totaling hundreds of thousands of dollars in cash and other items to Morris and Antonucci in exchange for their favorable treatment at Park Avenue Bank, SIGTARP said.
“Huff conspired with Morris and Antonucci to falsely bolster Park Avenue Bank’s capital by orchestrating a series of fraudulent transactions to make it appear that Park Avenue Bank had received an outside infusion of $6.5 million and engaged in a series of further fraudulent actions to conceal from bank regulators the true source of the funds,” SIGTARP said.
“Huff further conspired with Morris, Antonucci, and others to defraud Oklahoma insurance regulators and others by making material misrepresentations and omissions regarding the source of $37.5 million used to purchase Providence Property and Casualty Insurance Company, an Oklahoma insurance company that provided workers’ compensation insurance for O2HR’s clients and to whom O2HR owed a significant debt,” SIGTARP continued.
O2HR is a Tampa-based professional employer organization controlled by Huff. As a professional employer organization, O2HR was paid to manage the payroll, tax, and workers’ compensation insurance obligations of its client companies.
Instead of paying $53 million in taxes that O2HR’s clients owed the IRS, and instead of paying $5 million to Providence Property and Casualty Insurance Company for workers’ compensation coverage expenses for O2HR clients, Huff stole the money that his client companies had paid O2HR for those purposes, SIGTARP said.
Huff diverted millions of dollars from O2HR to fund his investments in unrelated business ventures and to pay his family members’ personal expenses, including mortgages on Huff’s homes, rent payments for his children’s apartments, staff and equipment for Huff’s farm, designer clothing, jewelry, and luxury cars.
Huff also paid Morris and Antonucci at least $400,000 in exchange for providing Huff with fraudulent letters of credit obligating Park Avenue Bank to pay an investor in one of Huff’s businesses $1.75 million if Huff failed to pay the investor back himself; allowing the Huff-controlled entities to accumulate $9 million in overdrafts; facilitating intra-bank transfers needed to maintain of Huff’s frauds; and fraudulently causing Park Avenue Bank to issue at least $4.5 million in loans to the Huff-controlled entities.
But that wasn’t all.
Huff, Morris, and Antonucci also engaged in a scheme to prevent Park Avenue Bank from being designated as “undercapitalized” by regulators, which could have prevented the bank from engaging in some types of banking transactions and would have subjected the bank to a potential enforcement actions by regulators.
Specifically, SIGTARP said that the group engaged in a series of deceptive, “round-trip” financial transactions to make it appear that Antonucci had infused the bank with $6.5 million in new capital when, in actuality, the $6.5 million was part of the bank’s pre-existing capital.
Huff, Morris, and Antonucci funneled the $6.5 million from the bank through accounts controlled by Huff to Antonucci to make it appear as though Antonucci was helping to stabilize the bank’s capitalization problem. Under those conditions, the bank could continue engaging in some banking transactions that it would otherwise have been prohibited from doing, which put the bank in a better position to receive $11 million from the Troubled Asset Relief Program.
To conceal their unlawful financial maneuvering, Huff created, or directed the creation of, documents falsely suggesting that Antonucci had earned the $6.5 million through a bogus transaction involving another company Antonucci owned, SIGTARP said.
Huff, Morris, and Antonucci further concealed the scheme by stealing $2.3 million from General Employment Enterprises, a publicly traded temporary staffing company, in order to pay Park Avenue Bank back for money used in connection with the $6.5 million transaction.
But that wasn’t all.
From July 2008 to November 2009, Huff, Morris, Antonucci, and Allen Reichman, an executive at an investment bank and financial services company headquartered in New York, conspired to defraud Oklahoma insurance regulators into allowing Antonucci to purchase the assets of Providence P&C and defraud the investment firm into providing a $30 million loan to finance the purchase.
Specifically, Huff and Antonucci devised a scheme in which Antonucci would purchase Providence P&C’s assets by obtaining a $30 million loan from the investment firm, which used Providence P&C’s own assets as collateral for the loan. SIGTARP.
But, because Oklahoma insurance regulators had to approve any sale of Providence P&C, and because Oklahoma law did not allow the use of Providence P&C’s assets as collateral for such a loan, Huff, Morris, Antonucci, and Reichman made a number of “material misstatements and material omissions” to the investment firm and Oklahoma insurance regulators about the true nature of the financing for Antonucci’s purchase of Providence P&C.
Among other things, SIGTARP said, Reichman told Antonucci to sign a letter that provided false information regarding the collateral that would be used for the loan, and Huff, Morris, and Antonucci conspired to falsely represent to Oklahoma insurance regulators that Park Avenue Bank – not the investment firm – was funding the purchase of Providence P&C.
After deceiving Oklahoma regulators into approving the sale of Providence P&C, Huff took $4 million of the company’s assets, which he used to continue the scheme to defraud O2HR’s clients.
Ultimately, in November 2009, the insurance company became insolvent and was placed in receivership because Huff, Morris, and Antonucci had stolen its remaining assets.
In addition to the prison sentence, Huff, was sentenced to three years of supervised release, ordered to forfeit $10.8 million to the United States, and ordered to pay a total of more than $108 million in restitution to victims of his crimes, including, among others, the Federal Deposit Insurance Corporation and the IRS.
When handing down Huff’s sentence, U.S. District Judge Naomi Reice Buchwald said Huff’s crimes were “truly staggering” and “eye popping.” Buchwald described Huff’s conduct, which was preceded by a federal conviction and failure to pay millions in civil judgments, as “a living example of chutzpah,” which she defined as “shameless audacity and unmitigated gall.”