People's United Financial in Bridgeport, Conn., has dismissed three employees in the wake of alleged fraud on commercial real estate loans.

The $37.5 billion-asset company fired Linda Rhoads, a senior vice president who ran commercial real estate lending for Long Island, and two unnamed associates, the Commercial Observer reported, citing unnamed sources. People's United discovered the internal fraud after an in-house audit was completed.

A spokeswoman for People's United told the Commercial Observer that it had "communicated any and all matters that require the attention of the Office of the Comptroller of the Currency to that office." People's United declined to make further comment to American Banker.

Rhoads and the other two employees allegedly changed the terms of commercial real estate loans, including extension options and interest-only payment periods, without obtaining the bank's credit approval.

Multiple transactions featured "more favorable conditions" than the bank allowed, including terms on a loan for a publicly traded company, the unnamed sources said.

No money has been reported missing following the alleged scheme. Rhoads and the two employees were based in a People's United's office in Hauppauge, N.Y.

Rhoads has since been hired by the $3.1 billion-asset Northfield Bank in Staten Island, N.Y.

The fraud was allegedly unknown to John Costa, who will resign as head of People's United's commercial real estate division. People's United has hired former M&T Bank executive Mark Melchione to replace him.

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