Even now, more than two years after his arrest, people wonder why Michael A. Whipple did what he did.
Why would an M&T Bank vice president on the rise cheat his employer out of $5.3 million, but keep none of the money for himself?
Even the judge who sentenced him to 39 months in prison Wednesday was struggling with the question.
“I’m having trouble making sense of this,” said U.S. District Judge Elizabeth A. Wolford. “I’m skeptical that your motives were truly altruistic.”
Wolford acknowledged that Whipple, one of the bank’s top loan officers, did not benefit significantly from his scheme, but kept returning to the question that also boggled the minds of friends and co-workers – why did one of M&T’s most trusted executives cheat his employer?
“You, in essence, became your own banker,” Wolford said. “And you were able to engage in this because people trusted you.”
To hear Whipple talk, his scheme was rooted in a frustration with the bank’s guidelines for lending money and his own passion for helping local companies he believed in.
In his first public comments about his wrongdoing, he described his scheme Wednesday as a well-intentioned but misguided effort to help those companies, an effort that soon turned reactive and criminal.
“I will absolutely live with that for the rest of my life,” Whipple said.
M&T fired Whipple in 2013 and, as part of a plea deal in July, he admitted orchestrating a loan scheme that ultimately led to an FBI investigation and his arrest. The FBI found that Whipple used fraudulent means to approve more than $5 million in small-business loans to companies he wanted to help.
As part of his sentence, Whipple will be required to repay the bank the money it lost.
“I want to publicly apologize to M&T,” Whipple said Wednesday. “The bank, over a nearly 20-year career, was my family.”
A rising star at M&T, Whipple spent nearly two decades at the bank and four years ago was promoted to vice president in its business banking section. In that position, he oversaw a loan portfolio valued at $150 million.
Whipple, a married father of three, is also widely known in the community for his volunteer work at his church, Christ the King Catholic Church in Snyder, and several charities. The Canisius College and University at Buffalo graduate served as a volunteer chairman on the 2010 Catholic Charities Appeal and was on the board of trustees at St. Joseph’s Collegiate Institute and the Amherst Chamber of Commerce.
“You’ve got someone who did this with good intentions in mind,” said defense attorney Rodney O. Personius. “Wrong, but well-intentioned.”
Personius said his client’s scheme was illegal but succeeded in getting financing to businesses that desperately needed it. Over time, the scheme collapsed, leaving Whipple to explain or cover up the losses.
Sources close to the case have suggested in the past that Whipple’s real motivation may have been a desire to avoid the kind of loan defaults that could have embarrassed him and cost him his job. They noted that Whipple forged signatures and created fraudulent documents as part of his scheme and suggested he may have grown desperate in his efforts at hiding his wrongdoing.
Federal prosecutors claim Whipple did benefit from his scheme in that he continued to receive the six-figure salary, bonuses and stock options he earned as an M&T vice president.
Even worse, said Assistant U.S. Attorney Trini E. Ross, was the extent of the fraud – $5.3 million over five years – and its harmful impact on M&T. “This was a major crime by a trusted employee,” Ross said.
The FBI also took issue with Whipple’s characterization of his crime as wrong but well-intentioned.
“Michael Whipple’s actions were not altruistic, they were criminal,” said Adam S. Cohen, special agent in charge of the FBI office in Buffalo. “Claims that the only victim of his scheming was his bank employer – as if that were acceptable – does not minimize the significant damage Whipple caused.”
Wolford could have sentenced Whipple to the recommended maximum term of more than six years in prison, but made it clear she viewed that as excessive given the defendant’s remorse, motives and extensive involvement in local charities and church groups.
There was never any suggestion that anyone but Whipple was behind the loan scheme, but one local company claims M&T wasn’t the only victim.
Jeffrey T. Drilling says his company, Client Server Direct in Amherst, was taking in $5 million a year in revenue when Whipple started using collateral secured by Drilling’s company to make loans to other businesses. M&T has denied those claims and says there is no evidence linking Whipple to Drilling’s business woes.
Wolford, in a decision earlier this month, ruled that Drilling did not have status as a victim in the Whipple case and that his legal claims would be better addressed in his civil suit against the bank.
For M&T, one of the region’s biggest employers, Whipple’s conviction revealed a lack of oversight in its loan-approval process and proved an embarrassing chapter in its history.
Bank officials say they moved quickly to correct its procedures.