NORFOLK, Va. (WAVY) - A Hampton Roads businessman and accused conspirator in a federal fraud case pleaded guilty in Norfolk federal court Friday.
Eric Menden admitted to the three counts against him; conspiracy to commit wire fraud, making a false statement to a government agency and conspiracy to commit bank fraud.
It came out in court Friday that Menden was in part responsible for the demise of the Bank of the Commonwealth, which closed its doors in 2011 .
Menden could have to pay the government $49 million in cash and property. He also faces up to 15 years in prison; five years for each charge.
Menden's business partner, 48-year-old George P. Hranowskyj of Chesapeake, was indicted on 14 counts Thursday, including wire fraud, unlawful monetary transactions and conspiracy. He has not been charged with conspiracy to commit bank fraud at this time. Hranowskyj is being held until his next hearing, which is scheduled for May 1.
According to court documents, several bank insiders worked with these business partners, who gave them more than $40 million in loans, no questions asked. In return, Menden and Hranowskyj would allegedly help the bank by buying bank-owned properties at an inflated rate.
According to Neil H. MacBride, United States Attorney for the Eastern District of Virginia, from January 2006 until March 2012, Hranowskyj and Menden bought properties in historic areas with the purpose of having them qualify for historic tax credits.
MacBride said the two financed the renovations by borrowing money f rom financial institutions.
The alleged scheme involved inflating the amounts spent on renovating properties, like Norfolk's James Madison Hotel on Granby Street and the Mercer Apartments on West Princess Anne Road, thereby increasing the federal and state tax credits.
The investigation is continuing.
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