Edgewater developer Fred Daibes pleads guilty to federal banking crimes
Edgewater developer Fred Daibes, whose projects helped transform the borough into Bergen County’s piece of the Hudson River Gold Coast, pleaded guilty on Wednesday before a federal judge to federal banking crimes.
Daibes appeared via Zoom to submit his plea agreement with the United States attorney for the District of New Jersey, despite denying any wrongdoing in May 2019. Daibes was indicted on multiple counts in 2018 for alleged conspiracy to circumvent lending limits set by Mariner's Bank, which he founded in 2001.
He and Michael McManus, the chief financial officer of Daibes Enterprises, allegedly used others not named in the indictment to secure millions of dollars in loans — which were used for Daibes' benefit — without the knowledge of the bank or the Federal Deposit Insurance Corp. The scheme ran from 2008 through 2013.
Daibes admitted to receiving more than $1 million in gross receipts from Mariner's Bank, pleading guilty to making false entries in a loan memorandum. Daibes' guilty plea was to a single count of the original indictment, which charges that the 2008 memo for a $1.8 million nominee loan falsely stated the borrower and the source of repayment when the line of credit was actually for Daibes, who funded the repayment.
Lawrence Lustberg, attorney for Daibes, said his client will be sentenced to probation and the rest of the charges against him are being dismissed. Lustberg called the plea agreement "favorable." According to the agreement, the charge to which Daibes pleaded carries a maximum penalty of 30 years and a fine of at least $1 million.
Lustberg said Daibes "is very happy that he is putting this matter, which has gone on for so many years, behind him."
He said Daibes regretted allowing the loan application to go before Mariner's Bank without saying he would receive the money from the line of credit.
"And as Mr. Daibes told the Court, he especially regrets that he did not recuse himself from voting on it, as he did, in fact, do with respect to the loan extensions thereafter," Lustberg said. "As the majority owner of the Bank, he always wanted to do right by it and believes that he did so for many years; he is sorry to have broken the rules in this case but believes that the punishment that is being imposed fits the offense and thankfully brings finality to this matter."
The plea is a major step in bringing the long-running criminal matter to a close, years after it thrust the high-profile developer and the bank he founded into scandal. McManus’ case is pending, but in 2019, prominent Gold Coast developer James Demetrakis — a business partner of Daibes — was sentenced to two years' probation for his part in the loan scheme. He was also assessed a $75,000 fine.
Demetrakis had pleaded guilty to one count of conspiracy to deceive a financial institution and the Federal Deposit Insurance Corp.
Daibes is scheduled to be sentenced Sept. 7 before United States District Judge Susan D. Wigenton.
Mariner’s Bank, meanwhile, has been sold, merging last year with Spencer Savings Bank. Daibes served as chairman of Mariner's Bancorp, the parent company of Mariner's Bank, until resigning early in 2019.
That same year, Daibes expressed confidence that he would prevail against the federal bank charges.
"We will be vindicated," Daibes said in a 2019 interview. "I'm being accused of trying to defraud the bank I owned over 90 percent of."
At the time, he attributed Demetrakis’ plea in the matter to his age, 79 at the time: "I believe he's older and just didn't have the fight in him," Daibes said in the interview.
The successful waterfront developer said at the time that the indictment initially hurt his standing with banks but that Daibes Enterprises was "working it out."
Daibes is perhaps best known for his role in reshaping once-sleepy Edgewater — where he worked early-on as a dishwasher and bartender at the old Binghamton ferryboat restaurant — with his many construction projects.
That included the upscale St. Moritz, which he sold for $120 million in 2014. The year before the sale, he was the victim of an armed home invasion robbery in his luxury penthouse in the building, a multimillion-dollar heist of cash, jewelry and other valuables.
Daibes' reach also extends to residential and other projects outside of Edgewater, including the Mahwah municipal building.
In 2001, the Mariner's Bank headquarters opened across from Edgewater's old borough hall. It grew during the real estate boom, adding branches and attracting the business of many noteworthy borrowers, including mayors, state judges, labor leaders and builders.
But in 2012 Mariner's fell under the scrutiny of state and federal regulators. It was ordered to address a wide range of financial safety and soundness concerns, including issues with asset quality, internal controls and deals with insiders.
The following year, James Cockinos, a former CEO of Mariner’s Bank, was sentenced to a year in prison and ordered to pay almost $514,000 in restitution after admitting that he conspired to commit bank fraud to obtain a $1.48 million mortgage for a client.
Kaitlyn Kanzler covers courts for NorthJersey.com. For unlimited access to the most important news from criminal trials to local lawsuits and insightful analysis, please subscribe or activate your digital account today.
Email: kanzler@northjersey.com
Twitter: @KaitlynKanzler8
This article originally appeared on NorthJersey.com: Fred Daibes, Edgewater NJ developer, pleads guilty to banking crimes
