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Former ABN AMRO executive charged with $45m fraud and bribery

Thursday, 06 December 2007

A former ABN AMRO bank executive and the owner of a security company allegedly engaged in a $45 million fraud and bribery scheme.

The two men and the security company were indicted on Thursday.

One defendant, George Konjuch, formerly first vice president in charge of security for ABN AMRO and LaSalle Bank, allegedly accepted $400,000 in cash and other benefits in return for steering tens of millions of dollars worth of security work to the security firm and its owner.

Co-defendant Armando Navarrete was arrested by FBI and Internal Revenue Service (IRS) agents on Thursday. Navarrete and his company Navarrete Industries, Inc., doing business as Integrated Security Solutions and INS, allegedly paid the bribes and over-charged the bank for the work they received from Konjuch by $45 million.

All three defendants were charged in a 22-count indictment returned by a federal grand jury on Wednesday and unsealed on Thursday following Navarrete’s arrest.

Konjuch, 54, was charged with five counts of bank fraud, five counts of bank bribery, and two counts of federal income tax fraud.

Substantially above-market prices

Navarrete, 45, was charged with five counts of bank fraud, five counts of bank bribery, and five counts of structuring monetary transactions. INS was charged with five counts of bank fraud and five counts of bank bribery.

The indictment also seeks $45 million in forfeiture against Navarrete and INS and $400,000 in forfeiture against Konjuch, as well as their homes and business premises.

According to the indictment, the fraud scheme extended from 2001 to 11 September 2006. As part of the scheme, Navarrete and INS charged what they and Konjuch knew were substantially above-market prices for preventative maintenance on security equipment and other services rendered to LaSalle Bank.

The indictment alleges that in return for Konjuch steering business to INS and approving inflated invoices, Navarrete and INS provided Konjuch and members of his family with cash and other benefits. These included two safes for use in his residence, installation and monitoring of a security system at his residence, payment for other services and improvements at his residence, including home landscaping and snow removal.

Konjuch also received exercise equipment, travel expenses, including travel to Las Vegas and Puerto Rico, and payments and benefits to his children, including a $10,000 payment to his daughter as a wedding present and attorneys' fees for his son.

Maximum penalty

The tax counts against Konjuch allege that he under-reported his income on his federal income tax returns for 2005 and 2006.

If convicted, each count of bank fraud and bank bribery against Konjuch and Navarrete carries a maximum penalty of 30 years in prison and a $1 million fine. The tax fraud counts against Konjuch each carry a maximum penalty of 3 years in prison and $250,000 fine.

The structuring counts against Navarrete each carry a maximum penalty of 10 years in prison and $250,000 fine. The charges against INS each carry a maximum penalty of five years probation and a $1 million fine. The Court may impose an alternative maximum fine of twice the gross loss or gross gain, whichever is greater.

Restitution is mandatory. The Court, however, would determine the appropriate sentence to be imposed under the advisory United States Sentencing Guidelines.

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