Montco banker faces up to 10 years after guilty plea
HUNTINGDON VALLEY Many customers of the Public Savings Bank, an unassuming building next to a children's dance studio in a Huntingdon Valley office park, never set foot inside its walls. But in less than three years, federal authorities say, more than $1 billion moved through the Montgomery County bank from various Venezuelan clients, many of whom wired large sums into accounts, then sent the money to other overseas institutions.
HUNTINGDON VALLEY Many customers of the Public Savings Bank, an unassuming building next to a children's dance studio in a Huntingdon Valley office park, never set foot inside its walls. But in less than three years, federal authorities say, more than $1 billion moved through the Montgomery County bank from various Venezuelan clients, many of whom wired large sums into accounts, then sent the money to other overseas institutions.
On Monday, H. Jack Miller, former president of the now-closed bank, pleaded guilty in federal court to failing to establish adequate anti-money laundering controls and not reporting a suspicious transaction that went through his bank: an $86,000 deposit that turned out to be drug money.
Miller faces up to 10 years in prison. As part of his plea agreement, he will not be allowed to hold banking jobs. Miller did not comment after the proceeding. His attorney, Louis R. Busico, said that Miller was a novice in the lending business when he took over the bank and that his errors stemmed from ignorance, not willful deceit.
"He's a very well respected member of his community who made a mistake that has been criminalized," Busico said.
Miller, 51, is one of the first known individuals to be charged under the Bank Secrecy Act. Normally the bank itself would be targeted in such an indictment, but because the bank was so small, authorities determined that Miller controlled day-to-day transactions.
The case was investigated by Homeland Security Investigations and the IRS.
Authorities found no evidence that money laundering took place or that Miller knew where the money was coming from, but they said he flouted bank laws that were designed to protect against potentially illegal transactions.
A Northeast Philadelphia native who attended Wyncote Academy, Miller lived in Bucks County until about 2005, when he moved his family to Florida and continued living in this area part time. He came to the bank in 2006 with a background in real estate lending but little experience in retail banking, and aspired to create an online-based institution that welcomed financial transactions from anywhere. "The days of going to the bank and waiting in line and things like that are gone," Miller told the Jewish Exponent in 2008, the year he became president. "It's all online."
Two other shareholders had dual citizenship with Venezuela, said Assistant U.S. Attorney Terri Marinari, and began to refer business to the bank.
Many U.S. banks refuse to work with such clients because of liabilities associated with such transactions. But PSB welcomed those accounts and made fees from every online transaction, according to sources familiar with the case.
Authorities said Miller never established an aggressive program to prevent money laundering, which would have called for him to appoint an experienced compliance officer to review transactions. Miller instead appointed a person who was "in over her head," Marinari said Monday.
"She expressed concern about lack of specificity with large wire transfers," she said. "She was told to process them anyway."
In 2010, authorities said, $86,000 was sent to a foreign account holder who Miller and other employees suspected was running an unlicensed money transmission business, but Miller never reported it to the FDIC. Further investigation revealed the money was the product of a drug deal, authorities said.
The bank collapsed in August 2011 and was taken over by the FDIC, which took on the bank's $11 million loss. By then, sources said, Miller knew he was under investigation.
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