NEW YORK - A former Third World debt trader at Manufacturers Hanover Trust Co. was indicted Monday on felony charges of bribery and banking law violations.
The trader, Daniel Young, 29, was accused of scheming to bilk Hanover out of almost $1 million related to a position it held in a loan to Colombia.
He also was fined $500,000 by the Federal Reserve Board, and may be barred permanently from banking by the Fed.
Link to BCCI
Robert Morgenthau, the U.S. district attorney in New York, also filed charges against George Liberatore, a former principal of DLF Inc., a private investment firm that had links to the Bank of Credit and Commerce International.
Mr. Liberatore and Mr. Young also were accused of conspiracy, a misdemeanor.
If convicted, each could serve up to eight years in prison.
Thee four-count indictment accused Mr. Young of inducing a junior associate at Hanover to sell a portion of a loan with a face value of $3 million to $4 million to a venture formed by Mr. Liberatore. Mr. Young had an undisclosed financial interest in the fund, according to the indictment.
Profit of over $500,000
The venture purchased the Colombian loan at 67.5% of face value and sold it 20 months later at 93% of face value. The pair made a profit of more than $500,000, the indictment said, while Hanover could have realized profits of almost $1 million if it had held onto the debt.
Mr. Young, who resigned from the bank in December 1990, could not be reached for comment.
The charges grew out of an ongoing investigation of illegal trading in lesser-developed countries' debt related to the Manhattan District Attorney's probe of BCCI.
Investigators said there "may be other cases" but declined to elaborate.
DLF is owned by Gaith Pharson, a Saudi businessman who the government accused of being BCCI's front man in the U.S., said investigators.
A spokesman at Chemical Banking Corp., which merged with Hanover in 1991, said the bank "cooperated fully with the authorities" but declined further comment.