HACKETTSTOWN, NJ (Warren County) – A Hackettstown man Wednesday admitted his role in a scheme to defraud a bank and bank regulators, according to Acting U.S. Attorney Rachael A. Honig.
Gary Ketchum, 73, pleaded guilty by videoconference before U.S. District Judge Kevin McNulty to a superseding information charging him with one count of conspiring to make false entries to deceive First State Bank and to deceive the Federal Deposit Insurance Corporation, FSB’s regulators, Honig said.
According to documents filed in this case and statements made in court, a three-phase scheme took place from 2009 to 2010. The first phase was to fraudulently infuse $7 million of capital into First State Bank (FSB). In the second phase of the scheme, conspirators caused FSB to make millions of dollars in loans based on material misrepresentations to cover up the fraudulent nature of the capital infusion and to end inquiries from FSB’s auditors. The final phase involved lying to the FDIC and FSB, among others, about the fraudulent capital infusion and loans.
In May 2017, a conspirator, Donna Conroy, pleaded guilty to her role and is awaiting sentencing. In October 2018, Ketchum, along with conspirators Joseph Natale, former CEO of FSB, formerly of Cranford, New Jersey, and Albert Gasparro were charged by indictment with conspiracy to deceive the FDIC and FSB, deceiving those two entities, conspiracy to commit bank fraud, and bank fraud. Natale is scheduled stand trial before Judge McNulty beginning on Nov. 1, 2021. The charges against Gasparro remain pending.
The conspiracy count to which Ketchum pleaded guilty carries a maximum potential penalty of five years in prison and a fine of $250,000, or twice the gross pecuniary gain derived from the offense or twice the gross loss sustained by any victim. Sentencing is scheduled for June 28, 2021.