Key points:
- Ex-general counsel James Blose sentenced to 4 years for skimming $7.4M from bank transactions.
- Scheme included falsifying documents and channeling funds through personal accounts.
- Fraud occurred over eight years across two banks, including after Webster’s acquisition of Sterling.
James Blose, the former General Counsel of Webster Bank, has been sentenced to four years in federal prison for orchestrating a fraud scheme that siphoned over $7.4 million from bank transactions over an eight-year period. The sentencing follows his guilty plea to charges of bank fraud and engaging in illegal monetary transactions in late 2023.
Federal prosecutors alleged that Blose, who served as the top legal officer at both Webster Bank and previously Sterling Bank (acquired by Webster in 2022), used his position to inflate closing costs and misappropriate legal fees during commercial loan transactions. These fees were funneled into personal and business accounts under his control, including one associated with his wife's law firm.
The fraud was carried out by manipulating closing documents—creating two versions for each transaction. According to court filings, Blose issued one set to the bank reflecting the funds the institution received, and another to the counterparty showing inflated costs, with the surplus redirected for personal use. This duplicity made it difficult for auditors and internal controls to detect the discrepancies.
The diverted funds were spent lavishly: $13,000 on a Swiss watch, $60,000 on vacation home furnishings, $22,000 on a residential sound system, and $400,000 on private air travel. These purchases came on top of more than $5 million in salary Blose legitimately earned during the same period.
Prosecutors further allege that Blose skimmed proceeds from the sale of 43 bank-owned properties, fabricating documents to conceal the theft. Despite his guilty plea, filings indicate he never provided a complete account of the misconduct. A victim impact statement submitted by Webster Bank noted that Blose maintained his behavior stemmed from a “misunderstanding” and failed to disclose which deals were affected.
The full amount of restitution Blose must pay remains undetermined, but sentencing documents describe a calculated and prolonged breach of fiduciary duty. The case underscores the risks financial institutions face when high-ranking legal executives exploit internal systems and opaque deal-making practices to their advantage.
