Federal grand jury says officer at failed Pittsburgh bank underreported delinquent mortgages

By Joe Mandak, AP
Wednesday, October 6, 2010

Feds: Defunct Pa. bank underreported bad loans

PITTSBURGH — A former top bank official underreported millions of dollars in delinquent mortgages in the months before a tiny Pittsburgh bank failed and its deposits were taken over by another bank, a federal grand jury charged.

Donna Shebetich, 45, of Pittsburgh was vice president, director and loan officer for Metropolitan Savings Bank when she allegedly filed five false quarterly reports with the Federal Deposit Insurance Corporation.

In the last report filed in November 2006 — three months before the bank failed — she allegedly listed $0 in delinquent mortgages, when the bank really had more than $7 million in loans at least 30 days overdue, according to an indictment returned late Tuesday.

The bank had roughly $15.8 million in assets in that quarter, according to the report. The Pennsylvania Department of Banking closed Metropolitan on Feb. 2, 2007, and named the FDIC the bank’s receiver.

Allegheny Valley Bank assumed about $12 million in FDIC insured deposits, and Metropolitan reopened as a branch of Allegheny Valley a few days later so its 1,450 customers could access their money.

The FDIC was created in 1933 to instill public confidence in the nation’s banks after many failed during the Great Depression. The agency insures accounts up to $100,000. At the time Metropolitan closed, about 70 accounts were estimated to exceed that limit by a combined $1.2 million, the FDIC said.

FDIC spokesman David Barr said Wednesday that subsequent investigation has determined the total amount of uninsured funds is closer to $925,000 and that he’s not sure how many accounts were affected. The FDIC has been able to recover about 42 percent of that money for customers, Barr said.

Court records do not list an attorney for Shebetich, and The Associated Press could not immediately locate a phone number for her.

As a bank officer, Shebetich was responsible for quarterly reports to the FDIC. She’s accused of fudging reports for quarters that ended in September and December 2005, and in March, June and September 2006.

For the quarter ending September 2005, Shebetich reported $92,000 in outstanding loans with payments between 30 and 89 days late, and $0 in loans with payments later than 90 days.

In reality, the grand jury found the bank had more than $1.9 million in loans in the first category, and another $2.8 million with payments more than 90 days late.

In the final quarter for which Shebetich is charged, the bank had more than $1.4 million in loans 30 to 89 days past due, and another $5.6 million in loans at least 90 days late.

Margaret Philbin, a spokeswoman for the U.S. Attorney’s Office in Pittsburgh, said she couldn’t comment on whether the investigation is continuing or whether other bank officials might face charges.

Metropolitan Savings was the first FDIC-insured institution to fail in Pennsylvania since Pulaski Savings Bank in Philadelphia closed on Nov. 14, 2003.

Shebetich faces a maximum of 30 years in prison and a $1 million fine if convicted.

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