CHICAGO (CN) – In a federal class action, account holders at a failed bank say the Federal Deposit Insurance Corp. has not fully compensated them since the Universal Federal Bank was brought down by compulsive gambler Adam Resnick, who ran a multimillion-dollar check-kiting scheme. The depositors also demand Resnick’s $2 million share of the $20 million that the government collected in a separate, qui tam health-care fraud case in which Resnick was the relator.
The class claims Resnick’s check kiting fraud cost the bank more than $10 million, forcing the FDIC to take control of the institution in June 2002. They want restitution of the deposits they held at the time “in excess of $100,000.”
The class claims that Resnick deposited money from an account belonging to his employer, Navarro, Elisco and Associates, into Universal’s account at American National Bank and Trust. He was able to withdraw and use the money immediately, with the help of Universal’s Chief Operating Officer, Antonette Navarro, the class claims.
“Defendant Resnick and his eventual co-defendant (in a criminal case) Antonette Navarro (head of Universal Federal) agreed that Defendant Resnick would make deposits into Universal’s account at ANB and communicate the amounts of the deposit by telephone to Navarro at Universal, and that Navarro would cause the total amount reported by Defendant Resnick to be credited immediately to NEA’s account at Universal, and would make the total amount reported by Defendant Resnick immediately available for the use of Defendant Resnick and other signers on the NEA account,” the complaint states, citing Resnick’s plea agreement.
“Defendant Resnick took advantage of this arrangement to engage in a check kiting scheme between the NEA account at Universal and Universal’s account at ANB.
Defendant Resnick wrote Non-Sufficient Funds (NSF) checks on the NEA account, deposited those NSF checks in Universal’s correspondent account at ANB, received immediate availability of those funds in NEA’s account at Universal, withdrew some or all of the immediately available funds, and then covered the previous NSF checks plus the withdrawn funds by depositing even larger amounts of NSF checks drawn on NEA’s Universal account into Universal’s correspondent account at ANB. This cycle continued almost daily for more than six months.
“Defendant Resnick made approximately 138 fraudulent deposits into the Universal account at ANB for the purpose of creating fraudulently inflated balances in the NEA account at Universal,” the complaint states. “These fraudulent deposits included more than $200 million in NSF checks drawn on the NEA account at Universal, and Defendant Resnick used the fraudulent balances in the NEA account to write checks to third parties, and to pay for wire transfers to online gambling businesses and casinos in Hammond, Indiana and Las Vegas, Nevada.”
In 2007, Resnick was sentenced to 42 months in prison and ordered to pay $9.7 million in restitution.
The named plaintiffs in the class action, Joseph Pavlik and Donna Smithey, want the amounts over $100,000 that they had on deposit at Universal.
They say the FDIC has closed its receivership, “despite still owing money to depositors, and ignoring the depositors’ interest in the corpus of the former Universal Federal, including the unpaid restitution award.”
The class claims that the FDIC declared on its “Universal information page” that it has made all “dividend distributions required by law,” but also shows that it has not fully paid all the depositors. It claims that any restitution Resnick pays will go to the FDIC, rather than to the bank’s depositors and creditors.
The class claims that depositors are the FDIC’s first priority by law, and it demands enforcement. It sued the FDIC and Resnick, and the estate of Universal Federal Bank as a nominal defendant, since the bank no longer has a board of directors.
Lead counsel for the class is Clinton Krislov.