Wilmington Trust headquarters in Delaware. Photo Credit: Photo: RevelationDirect via Wikimedia Commons

A federal jury on Thursday found four former Wilmington Trust executives guilty of orchestrating a scheme to hide hundreds of millions of dollars in bad loans from regulators and investors.

The 12-member panel convicted Robert V.A. Harra, David Gibson, William North and Kevyn N. Rakowski on 15 counts of fraud and conspiracy in a Wilmington courtroom after about a week of deliberations. The U.S. Attorney's Office for the District of Delaware confirmed the verdict Thursday afternoon.

Harra, North and Rakowski formerly served as Wilmington Trust's president, chief credit officer and controller, respectively. Gibson, the bank's former CFO, was convicted on three additional counts of making false certifications in financial reports

In a statement, U.S. Attorney David C. Weiss praised the verdict and said the defendants were “victim[s] of their own arrogance.”

“Defendants made the conscious decision to lie about hundreds of millions of dollars in matured, past due loans,” he said. “Defendants' failure to disclose these past due loans was significant.”

A four-member trial team from McCarter & English, which represented Harra during the six-week trial, said Thursday that the attorneys were “stunned” by the jury's decision.

“The simple fact is that our client is an honorable man who never in his life thought about committing a crime. We will vigorously appeal this,” they said in a statement.

David E. Wilks, who represented North, also vowed to continue fighting the verdict. In a statement, he said his client remains “steadfast” that he never committed a crime.

“The evidence is undisputed that Mr. North was highly regarded as an honest, trustworthy, ethical and hardworking banker by his fellow Wilmington Trust employees,” said Wilks, of Wilks, Lukoff & Bracegirdle.

Attorneys for the other defendants were not immediately available to comment.

The executives were accused in May 2015 of concealing the amount of ”toxic” real estate loans on its books between October 2009 and November 2010. According to the indictment, Wilmington Trust avoided mandatory disclosures to the U.S. Securities and Exchange Commission and the Federal Reserve Bank by “waiving” matured loans from the reporting requirements for past due loans.

Prosecutors said that by the end of 2009, the bank reported just $10.8 million of the $344.2 million in commercial real estate loans that were past due by 90 days or more, giving investors and regulators a false impression of the Delaware financial institution's health. Under pressure to eliminate the past due and matured loans, the executives hatched a plan to “mass-extend” more than 800 commercial loans worth around $1.3 billion.

Once the public learned the scope of the toxic loans, Wilmington Trust was purchased in a fire sale by M&T Bank in November 2010 for just $3.84 per share—about $9.41 per share less than its value when the bank raised $273.9 million in a public offering nine months prior, according to the indictment.

Wilmington Trust's former chairman and CEO Ted Cecala was never charged, but the bank itself became the first financial institution to face criminal charges in connection with the federal government's Troubled Asset Relief Program.

Wilmington Trust reached a $60 million settlement with prosecutors last October, just as the trial before U.S. District Judge Richard G. Andrews of the District of Delaware was set to begin.

The individual defendants had maintained their innocence and denied that a conspiracy ever existed. The defense team—which also featured attorneys from Paul Hastings and Dalton & Associates—argued that the loan waiver practice was common in the industry and was no secret to regulators.

Prosecutors, they said, had failed to prove that the defendants agreed to interfere with government oversight of the bank and committed overt acts to further the scheme.

Government attorneys, however, were able to point to witness testimony, as well as a series of emails from the executives detailing the bank's practice of extending matured loans and their desire to keep it hidden.

“The jury understood these facts. People who have mortgages, car loans and credit cards understand that there are no loan extensions or waivers. When the bill comes due banks expect to be paid—period,” Weiss said.