The case of Joseph Graziano Jr. — who has pleaded not guilty to 22 federal counts of bank fraud, bank embezzlement and mail fraud — raises serious questions about local banks' procedures for protecting their security internally and vetting borrowers.
Mr. Graziano, 28, of Pittsburgh, is accused of embezzling nearly $2.5 million over three years from Bank of New York Mellon Corp., where he began working as a corporate trust administrator after earning a University of Pittsburgh economics degree in 2008. Clearly, BNY Mellon's internal controls didn't work as they should have.
Graziano, who reportedly lived a high-roller lifestyle, also is accused of fraudulently obtaining loans. For a loan to buy his Downtown condominium, he allegedly told Dollar Bank he had more than $115,000 in a Philadelphia Federal Credit Union account. It actually contained less than $9. He allegedly obtained other loans, some to cover gambling debts, by using as collateral exotic cars he'd already sold.
Other banks he allegedly snookered include First Niagara ($226,000-plus) and First Commonwealth ($130,000). Those banks, and Dollar, obviously didn't properly vet his creditworthiness.
Graziano's alleged misdeeds should prompt all financial institutions to re-evaluate their internal and external security procedures — with an eye toward fixing what his case suggests might be not just isolated mistakes but systemic flaws.
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