New Jersey “Gold Coast” developer Fred Daibes has pleaded guilty to taking part in an insider loan scam at Mariner’s Bank, the financial institution that he founded and where he served as chairman of the board of directors.
Daibes, the Edgewater-based developer whose glitzy projects have transformed the Hudson River waterfront, appeared in U.S. District Court by Zoom on Thursday and pleaded guilty to one count of concealing a $1.8 million bank loan made to him.
In exchange for the guilty plea, the government agreed to drop the remaining 13 counts in the indictment and won’t seek a prison term when Daibes appears before U.S. District Court Judge Susan D. Wigenton on Sept. 7.
Daibes will be sentenced to probation, according to the plea agreement.
“Mr. Daibes is satisfied with the plea agreement in this case, which calls for a sentence of probation, and the dismissal of 13 of the 14 charges that were pending against him,” his attorney, Lawrence S. Lustberg, said in a statement. “More than anything else, Fred is very happy that he is putting this matter, which has gone on for so many years, behind him.”
Daibes’ longtime business partner, James Demetrakis, pleaded guilty in 2019 to his role in the Mariner’s Bank scandal. Demetrakis admitted in federal court that he received two loans from Mariner’s Bank — one for $1.8 million, the other for $2.6 million — and then gave the money to Daibes.
“Mr. Daibes very much regrets that he allowed the loan application, which was filed by Mr. Demetrakis, to go before the Mariners Bank Board without noting that he would receive the proceeds of that line of credit,” Lustberg said. “And as Mr. Daibes told the court, he especially regrets that he did not recuse himself from voting on it, as he did in fact do with respect to the loan extensions thereafter.”
“As the majority owner of the bank, he always wanted to do right by it and believes that he did so for many years,” the attorney added. “He is sorry to have broken the rules in this case but believes that the punishment that is being imposed fits the offense and thankfully brings finality to this matter.”
Daibes paid the money back, but the loans were made under false pretenses to the avoid federal bank regulators, the indictment alleged. Demetrakis, who was 80 years old at the time, was sentenced to two years’ probation and fined $75,000 by U.S. District Court Judge Michael Vazquez.
There is no mention of a fine in Daibes’ plea agreement, although the judge could impose up to five years of supervised release when he is sentenced.
Daibes, who heads the development firm Daibes Enterprises, and his chief financial officer, Michael McManus, were indicted in October 2018 and charged with arranging a series of five allegedly crooked bank loans made through Mariner’s Bank.
The loans, totaling $9,075,000, were made to five nominees between 2008 and 2013. But the money didn’t go to the nominees; it went through them to Daibes, who, with the help of McManus, falsified records to conceal the transactions, the indictment alleged.
Both defendants remained free as the case crawled through the federal court, frequently delayed by the backlog caused by the coronavirus pandemic, Lustberg said.
For 30 years, Daibes and Demetrakis have been driving force behind much of the redevelopment on the Hudson River waterfront in Edgewater and Fort Lee. Daibes’ signature project is the St. Moritz, the gleaming high-rise in Edgewater with views of the Manhattan skyline that he sold in 2014 for $120 million.
Daibes started Mariner’s Bank in Edgewater around 2000, and was its principal shareholder and chairman. But he is no longer connected to the institution, after it merged with Spencer Savings last year.
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Richard Cowen may be reached at firstname.lastname@example.org.