Admits Embezzling $3.7 Million From Ely Bank
Former Ely City councilman Steve Marich pled guilty this week to embezzling at least $3.7 million and perhaps more than twice that amount from the First National Bank of Ely over the course of a decade or more.
United States Attorney of northern California Benjamin B. Wagner announced in a press release dated the same day that Stephen Marich, 43, of Ely, pleaded guilty Monday before United States District Judge Kent J. Dawson in federal court in Las Vegas to embezzling at least $3.7 million from the First National Bank of Ely over about 10 years.
Marich’s formal plea came two months after he signed the deal with the US Attorney office on December 6, 2010, almost a year to the day Marich fled Ely under a cloud of suspicion.
Wednesday just two days after Marich pled guilty, a spokeswoman for the US attorney’s office announced that the ex- city councilman’s ex wife who is also an assistant US Attorney would not be prosecuted in relation to the case.
No investigation is under way and no charges are expected against Sudabeh (Sue) Fahami said Lauren Howrood, spokeswoman for the U.S. attorney’s office in Sacramento.
Fahami remains on the job as deputy chief in charge of the U.S. attorney’s branch office in Reno.
Howrood said the FBI extensively investigated the case and determined that no one other than Marich was involved.
Fahami’s relationship to Marich may have been at least partly the reason why almost a year elapsed between the initial charges and his plea bargain.
In fact had Marich not been Marich and Fahami had not been Fahami it would have been the Reno US attorney’s office that would have had the case.
In the plea bargain marich maintains that he and he alone that committed the embezzlement which according to the document began well over ten years ago and as early as the mid-1990’s.
According to the plea document, prosecutors could only document that $3.7 million had been stolen from the bank, however the plea bargain suggest that Marich might have pilfered as much as $5.6 million in the 15 years he worked at the bank rising from cashier to Vice President.
According to court documents, Marich used his job as vice president of the First National Bank of Ely to pilfer the money from customers’ Treasury bill accounts. The thefts went on for at least nine years as Marich fueled a gambling habit that had him placing bets with Internet casinos overseas.
According to the plea agreement Marich agreed not to appeal either his conviction or his sentence as long as the time in prison was not more than the minimum suggested in Federal Sentencing guidelines– 30 years. Marich also agreed to pay at least $3.7 million in restitution or whatever the amount the court decides he owes. He also acknowledged that the First National Bank of Ely was likely to request over $5.6 million in restitution.
In addition Marich agreed to pay any fines imposed by the court up to $1 million.
“Those numbers in the plea agreement are government numbers,” said Bank President John Gianoli.
The bank underwent an exhaustive three month audit last year by FBI forensic auditors. That concluded in April 2010.
But while the disgraced ex-city councilman has agreed to make restitution few believe he can.
According to Marich’s attorney Reno attorney Scott N. Freeman, who represents Marich, said his client gambled away almost all of his ill gotten gains.
“Mr. Marich had a horrible, horrible gambling problem that got out of control,” Freeman said to the Las Vegas Review-Journal. “He has nothing to show for it.”
The excuse of a gambling problem doesn’t carry much water in Ely.
“It is one thing to lose everything you have,” said one of Marich’s victims. “But to steal from you friends and employer? That is such a deep betrayal of trust.”
Apart from Marich’s family perhaps the man most shaken by the crimes was Gianoli whose family owns the 105 year old First National Bank.
Admitting that his business suffered a serious blow, Gianoli said his bank weathered the storm and was now healthy.
Indeed if this story has a hero it is Gianoli. Even before the FBI auditors had concluded their work the bank president vowed before depositors that he would make good on every cent Marich may have purloined and by the summer of 2010 still six months before the plea bargain was reached he had.
“The FBI did their investigation and the US Attorney compiled the case,” he explained but my duty and my responsibility was to our depositors. I know maybe another bank might have done things different. But it was the right thing to do.”
Thankfully for Gianoli and its depositors the bank is federally insured for deposits up to $250,000 otherwise Marich would not have ruined not only his life but the well being of perhaps hundreds of Ely residents not to mention putting the bank out of business.
An Ely businessman speaking on the condition of anonymity says he could have lost thousands of dollars to the man he thought was his friend for 20 years.
“I trusted him completely,” said the source. “If he doesn’t go to jail over this then something is very very wrong.”
“He was Ely’s golden boy from a golden family,” said another Ely businessman who also spoke on the condition of anonymity. “Heck if he offered to sell me some T-Bills, I would have bought them. I never did but only because he never offered.”
However even while Marich was held in extremely high esteem there were warning signs that the man had a problem managing his money and with gambling.
According to several sources gossip was rampant four or five years ago that Marich owed a lot of money” to one and perhaps more Las Vegas sports books and had to bailed out by family and friends.
“Everyone knew that, he wanted me to start sports betting but that was too rich for my blood,” said one Ely resident.
But with Las Vegas five hours away by car and an hour away by plane Marich had no easy access to feed his alleged habit.
All that changed two years ago when the Hotel Nevada, less than 100 feet away from the erstwhile golden boy’s bank desk open an electronic kiosk tied directly in to a Las Vegas Sports Book.
“He was there a lot,” said one casino employee. “I guess they are now putting two and two together.”
Just why Marich came under suspicion particularly when he did may have something to do with 2009’s infamous Black Sunday.
On October 25, Week 7 of the 2009 NFL season, Nevada bookies found themselves paying out more money than they won primarily because virtually every favorite in every game not only won but made the spread.
Most gamblers bet favorites in NFL games, and that Sunday almost every favored team covered the point spread.
“Every sports book director in this town was on their knees crying uncle,” said Jay Kornegay, director of the Las Vegas Hilton’s race and sports book to the Los Angeles Times. “Black Sunday,” he called it, his worst in 22 years, noting he paid $3,000 to a 65-year-old woman holding five $2 NFL parlay bets.
All told, the city’s sports books lost about $8.5 million that day, said Jay Rood, director of the city’s largest sports and race book, MGM/Mirage. “One of the worst NFL weekends in the history of Nevada,” Rood said.
While casual bettors cleaned up on Black Sunday, so called avid sports bettors may have taken it on the chin just like the bookies if they bet against the favorites.
At least the timing of between the discovery of suspicious transactions at the bank and Black Sunday does not contradict the theory that Marich may have been hit by Black Sunday and hit hard.
Sports books often give long time clients 30 days to cover their losses before they take a new bet. With the Thanksgiving holiday taken into account it would have just about that period of time between Black Sunday and the first hint that all was not right at the First National Bank of Ely and its Chief Cashier Steve Marich.
As for the City of Ely, officials there continue to insist that there is no need to investigate the municipal books.
“We asked them several times” said Watts last year. “(City Clerk) Jim Alworth said they get audited every year and they are satisfied that every thing is fine,” Watts added. “If it was me I would check again but we can’t go in unless they ask.”
Despite statements from Alworth that Marich had no access to Ely city accounts, the Advocate has learned that at least during the tenure of George Chachas, Marich functioned as something as the Chief Financial officer of the city of Ely.
“He was the guy who signed all the checks when I was Mayor,” said Chachas who served during the mid 2000’s. “If he did what he is accused of doing to his friends and to the bank, I don’t think not having permission to access the city accounts would have stopped him.”
“Books can balance,” said former White Pine County Clerk Donna Bath. “Our books balanced for years while we had someone in a position of trust who was actively embezzling from the county. You can have audit after audit, but if the person is clever enough and in a position of trust they can get away with stealing for years.”