Originally Posted - July 25, 2006

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MANHATTAN--Three individuals and five companies have been indicted for bribery, money laundering and other charges involving former New York State Banking Department officials and C.L.B. Check Cashing, Inc., one of the largest check cashing companies in New York State.

Indicted are former NYSBD bank examiner James Gass, 65, of Chester, C.L.B. Check Cashing, Inc. owner and president Louis Renzo, 51, of Woodmere and senior vice president William DeRespino, 44, of Rockville Centre who is also a former NYSBD bank examiner, and related corporations owned by Renzo.

Gass left the Banking Department in 2003. DeRespino left the Department in 1998.

Manhattan district attorney Robert Morgenthau said the investigation leading to the charges revealed that Gass, Renzo and DeRespino engaged in corrupt dealings in which Gass provided unauthorized assistance and confidential NYSBD information in exchange for benefits, including cash and employment. Renzo and DeRespino allegedly laundered some bribe payments through gas stations owned by Renzo. In addition, the defendants committed perjury and false filing offenses to conceal their corrupt relationship.

The check cashing industry in New York is regulated by the Licensed Financial Services Division of the NYSBD. Check cashers must obtain licenses from the NYSBD for each location they seek to operate and are subject to a rigorous license application process. Once licensed, check cashers are required to comply with an extensive array of laws and regulations, including New York State Banking Laws, NYSBD regulations and related Federal Bank Secrecy Act and anti-money laundering laws. As a result, check cashers are subject to examination and monitoring by NYSBD bank examiners. Gass was a bank examiner in the Licensed Financial Services Division, responsible for overseeing and monitoring the compliance of many check cashers, including CLB.

The investigation revealed that James Gass allegedly corruptly used his position as a bank examiner to benefit CLB, Louis Renzo and William DeRespino. Gass allegedly inserted himself in contract negotiations between CLB and another check casher, and used his authority inappropriately to influence those negotiations. As a result, Renzo and CLB were able to purchase the competitor at an advantageous price.

Rockaway Kennedy Check Cashing ("Rockaway Kennedy"), located at 160-39 Rockaway Boulevard, Jamaica, Queens, was a rival check casher that was experiencing financial difficulties, including its failure to meet liquidity requirements under existing banking regulations. As a result, the owner of Rockaway Kennedy was looking to sell his business and was negotiating with two prospective purchasers, one of which was CLB. Rockaway Kennedy's owner contacted Gass to let NYSBD know of the status of the negotiations. Gass volunteered confidential NYSBD information that the company competing with CLB on the bid had its own regulatory problems and would not be able to get a license to operate the location. Consequently, Rockaway Kennedy ceased negotiations with the other bidder and began to negotiate solely with CLB.

While the negotiations with CLB were taking place, Renzo proposed that CLB take over the location before the formal closing of the sale under a management agreement; such an agreement would have required approval by NYSBD. Instead, Gass suggested to the owner of Rockaway Kennedy that the parties fashion the agreement as an "employment agreement" rather than a management agreement, as employment agreements are not subject to NYSBD approval. Subsequently, a notice was sent to Gass informing NYSBD of the sham employment agreement and he approved it, despite not having the authority to do so.

Once CLB took over Rockaway Kennedy's location, Renzo attempted to re-negotiate the sale price. Rockaway Kennedy's owner tried to open negotiations with other check cashers beside CLB, but CLB used Gass to discourage any such negotiations. CLB sent a series of letters to Gass pointing out that Rockaway Kennedy's liquidity problems still existed, notwithstanding that CLB was operating and controlling the financial condition of the location and could therefore have cured its liquidity problems. As a result, in an unprecedented action by a bank examiner, and in direct violation of Banking Department policies and procedures, Gass sent Rockaway Kennedy a letter informing its owner that unless he cured the liquidity problem within 60 days, NYSBD would take disciplinary action against Rockaway Kennedy. Such a letter, if warranted, may only be issued by the Superintendent of Banking, or by a Deputy Superintendent; Gass was a lower level examiner. Rockaway Kennedy was ultimately sold to CLB for significantly less than the originally agreed upon purchase price.

Prosecutors say Gass further violated his duties as a bank examiner by providing Renzo and DeRespino with confidential NYSBD filings relating to other rival check cashers. Check cashers are required to file annual financial reports which discloses, among other things, how much business they do at each location. In the highly competitive check cashing industry, access to such confidential information is extremely valuable, and can be used to identify new potentially profitable locations and business strategies.

In exchange for providing unauthorized assistance and confidential NYSBD information to CLB, Gass allegedly received at least $35,000 and an $85,000 a year job. Gass received three checks while he was at NYSBD, each for $5,000, from gas stations owned by Renzo that were unrelated to CLB. These three checks were then cashed at CLB. As a result, Renzo and the three gas station companies -- CLB #6, Inc., C.L.B. #3Corp., and Gas Check Corporation II - are charged with money laundering and related crimes. Gass also received an $85,000 per year job as the CLB "compliance officer", which he started immediately upon his retirement from the NYSBD at the end of March of 2003. After joining CLB, Gass received another $20,000 -- a $15,000 check from CLB Management Corporation, which was cashed at CLB, and a $5,000 check from CLB Management Corporation which was deposited into his personal account. This $20,000 was never reported on Gass's tax returns as income.

The perjury charges arise out of a June of 2003 trial, in which Gass testified falsely to conceal his corrupt relationship with Renzo and CLB. Specifically, in June of 2003, Howard Sklar, an accountant who serviced numerous check cashing entities, was on trial in New York County Supreme Court on allegations of negligent accounting practices. One of the plaintiffs was CLB.

On June 17, 2003, James Gass testified as an expert on behalf of the plaintiffs, including CLB. Gass's testimony was critical for the plaintiffs, as he was the sole witness to testify in support of the plaintiffs' allegation that Sklar's fraudulent accounting was the direct cause of a $500,000 Banking Department fine that had been levied against the plaintiffs. Gass was questioned on cross examination about whether he received any payments from Renzo while he was employed as a NYSBD bank examiner. In response, Gass acknowledged that he received a payment from Renzo while he was a NYSBD bank examiner, but falsely testified that it was an "advance on the amount we agreed to pay me for my loss of pension and my son's tuition." In fact, the payments were not made to pay Gass for any pension loss or to pay his son's tuition, but were made pursuant to his ongoing corrupt relationship with Renzo, DeRespino, and CLB.

Gass gave further false testimony on cross-examination, prosecutors say, by stating that he never advised anyone to sell to CLB, and never recommended that the Rockaway Kennedy owner sell to Renzo.

In addition to the bribe receiving charges, Gass is further charged with defrauding the government for compromising his position as a NYSBD bank examiner by violating his duties as a public servant and concealing his corrupt relationship with defendants from the NYSBD.

Finally, the investigation also established that Renzo and CLB engaged in schemes to defraud New York City and State of sales tax on pre-paid phone cards that were sold at the CLB stores throughout New York City. 7-25-06

© 2006 North Country Gazette