Francesco “Frank” Mileto, entwined in the fraud case involving defunct Naples-based Orion Bank, has a similar connection with a California bank that failed last year.
Jerry Williams, former CEO of Orion, pleaded not guilty Thursday to an indictment charging him with conspiracy to make the institution appear healthier than it was by funneling bank money to straw borrowers, who then invested part of that money back into the bank.
Mileto and two former executives of Orion were charged on similar counts in separate complaints. They have pleaded guilty and signed plea agreements.
Mileto, 40, was charged as a main conspirator by setting up two shell limited-liability companies to receive $82 million in loans from Orion Bank, which included $26.5 million lines of credit. Of the $26.5 million, $15 million was used to purchase bank stock in violation of Florida law. With additional loans, Mileto bought distressed bank loans from Orion.
On or about June 29, 2009, Orion officials closed the loans with Mileto’s two shell companies — despite knowing that they were shells controlled by Mileto, that they were not credit-worthy and that the bank had information Mileto had previously submitted fraudulent financial documents to Orion, according to a plea agreement.
Now, in the aftermath of the alleged scheme, several major properties in Southwest Florida are still the subject of foreclosure lawsuits.
According to a report by the Gainesville Sun, Mileto also borrowed $51 million from a failed California bank and defaulted on that loan.
First Regional Bank of California in December 2009 filed to foreclose on a Gainesville apartment complex owned by Mileto, the newspaper reported.
According to the Sun, Mileto was in default on $51 million still owed on that complex and on three Jacksonville complexes he bought from a Los Angeles condo conversion developer in November 2008.
On Jan. 29, 2010, First Regional was closed by the California Department of Financial Institutions and the FDIC was named receiver. Raleigh, N.C.-based First Citizens Bank & Trust Co. assumed First Regional’s assets and liabilities.
Efforts the past two days to reach Mileto’s criminal attorney, Michael Pasano of Miami, have been unsuccessful. Calls to other attorneys for Mileto weren’t returned Friday.
Millions in debt
According to a bankruptcy filing in 2010 by Tamara Mileto, Francesco’s wife, the couple have a $280,000 house in Tamarac, but have $50 million in loans — $42 million of which are from Firstbank Puerto Rico’s Miami agency.
According to the filing, the couple are listed on four civil lawsuits, all real estate-related.
The Florida Department of State’s website indicates that Francesco Mileto’s 33 limited liability companies deal in real estate and property management.
Orion was the second-largest privately held bank in the state and the largest in Southwest Florida. The bank had $277.3 million in non-performing debt related to real estate on its books as of Sept. 30, 2009, the most of any bank based in Lee and Collier counties.
Williams, 51, who now lives in Texas, faces 13 charges related to misapplying bank funds, making false bank entries, wire and mail fraud and conspiracy to defraud the United States, among other charges.
Mileto was charged and entered a plea agreement this week. Former bank vice presidents Thomas Hebble and Angel Guerzon also were charged and entered plea agreements. All three are expected to testify against Williams.
Meanwhile, foreclosure lawsuits continue on some of the notes Mileto obtained on Southwest Florida properties.
For example, Mileto’s company Southeast Retail Colony LLC continues to try to foreclose on Colony Plaza LLC and Naples-based developer Joe D’Jamoos.
D’Jamoos is being foreclosed on for a $5.1 million loan from Orion to build Colony Plaza, a three-story commercial plaza on U.S. 41 in Bonita Springs.
Efforts to reach D’Jamoos and his attorney for comment were unsuccessful.