A Dover developer linked to the collapse of Wilmington Trust Bank has pleaded not guilty to felony charges of conspiracy to commit bank fraud, making false statements to a financial institution and money laundering.
The U.S. Attorney General’s Office filed an indictment against Michael Zimmerman, owner of BBC Properties, Jan. 23. The charges stem from a federal investigation of the relationship between Zimmerman and Wilmington Trust.
Michael Zimmerman was arrested Jan. 25 and released three days later. He appeared before U.S. Magistrate Judge Mary Pat Thynge Feb. 21 at the Federal Courthouse in Wilmington and pleaded not guilty to the indictment.
Thynge ordered attorneys to file pretrial motions within 30 days.
Wilmington Trust – which is being sued by a class of its shareholders for its lending practices – provided financing for a number of Zimmerman’s projects, including Salt Pond Plaza in Ocean View and two other projects in Dover.
Zimmerman’s conspiracy charges relate to requests for funds to pay for architectural and engineering services that were not actually performed. A July 8, 2007 request for $357,500 was taken from the bank to pay for what the indictment called soft costs; instead, a check was written to Zimmerman for $309,800. The remaining funds were paid to Zimmerman’s company, BBC Properties, and Zimmerman’s Salt Pond partner Kevin Barrett, who owned an 11 percent share of Salt Pond LLC.
In the indictment, Assistant U.S. Attorneys Robert Kravetz and Lesley Wolf cite five similar requests for the Salt Pond project and three similar requests for Zimmerman’s two Dover projects.
“At minimum, the fraudulent draw requests for the three projects totaled approximately $1.25 million,” attorneys say.
Kravetz and Wolf claim Zimmerman borrowed more than $12 million from Wilmington Trust to fund the Salt Pond Plaza project in Ocean View.
Wilmington Trust sold the debt associated with Zimmerman’s developments to a third party on March 30, 2011, the indictment says. “Both in connection with the sale and prior to this time, the bank incurred a loss on the three Zimmerman-related projects in excess of $26 million,” Kravetz and Wolf state. Nearly $10 million was lost on the Salt Pond project.
The FBI began its investigation after retired Sen. George Bunting, D-Bethany Beach, wrote a series of letters, beginning Oct. 14, 2010, asking the Federal Reserve to investigate the bank’s commercial loan practices.
Zimmerman has facilitated shopping centers, drug stores, grocery stores and residential centers in Sussex County, including Zwaanendael Landing in Lewes, Walmart in Georgetown, Long Neck Plaza and Milton Park Center. Zimmerman could not be reached for comment.