N.J. Bank Exec Charged with Fraud

Feds Say Suspect Embezzled More Than $600,000
N.J. Bank Exec Charged with Fraud
A former employee of Pamrapo Savings Bank was arrested on June 2 and charged with diverting and embezzling more than $600,000 from the Bayonne, New Jersey-based bank.

Brian Campbell, former managing director of the bank's investment company, was taken into custody by federal agents and faces a 54-count indictment with charges of mail fraud and money laundering. An initial hearing on the charges was held by U.S. Magistrate Judge Madeline Cox Arleo in the District of New Jersey, Newark Division.

Pamrapo Bank has more than $500 million in assets and 10 offices in New Jersey. The now-defunct Service Corporation was the investment subsidiary of Pamrapo Savings Bank, S.L.A., a savings and loan holding company. The Service Corporation provided securities and investment services including the sale of stocks and bonds, mutual funds, annuities, various types of insurance policies and other money management services, to clients for a fee. It also offered insurance and annuity products.

The Service Corporation was required to conduct or "clear" securities transactions, such as the purchase, sale and transfer of stocks, through a registered broker-dealer. Its other investment services went through a second subsidiary, an accounting company, which was a sister company to the registered broker-dealer. Campbell was designated as a "registered representative" of these two entities and was authorized to conduct securities transactions and other investment services for customers on behalf of the Service Corporation through the two entities.

The commissions and fees Campbell generated through the business were first to go the service corporation. After the company's cut of the fees and commissions were taken, Campbell was paid at rates set by the board of directors.

In August 2006, Campbell's compensation was modified, resulting in a significant pay cut. Then in 2007, the indictment says, Campbell allegedly created a scheme to divert money belonging to the Service Corporation to himself.

The indictment states Campbell began his scheme by sending a letter to the registered broker-dealer, falsely claiming Pamrapo Savings Bank wanted commissions owed to the Service Corporation to be paid directly to Campbell. Campbell allegedly had a second letter signed, directing the registered broker-dealer and the accounting company to pay the vast majority of the fees and commissions owed to the Service Corporation directly to Campbell.

In the same time period, the indictment states, Campbell had various insurance companies issue fees and commissions owed to the Service Corporation directly to him, without the authorization or knowledge of the board of directors. Campbell tried to cover up his crime by making false statements to the Pamrapo Savings Bank, its chief financial officer, the board of directors, the Service Corporation and others.

He allegedly received more than $600,000 in checks from the various entities in this scheme. He is also charged with money laundering, as he allegedly laundered portions of the fraud proceeds to pay his credit card bills.

If convicted, Campbell faces a maximum penalty of 20 years in prison and a $250,000 fine on each of the mail fraud charges. He faces a maximum prison sentence of 10 years and a $250,000 fine on each of the money laundering charges.

Campbell's arrest and indictment come just two months after the Office of Thrift Supervision assessed a $5 million penalty against the bank for violations of the Bank Secrecy Act.

Investigating the case were officials from the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), the Department of Justice and the Internal Revenue Service.

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.

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