An affidavit filed by an agent of the FBI alleges that Mr. Armstrong, formerly a Vice President in the Product Origination Department of Union Bank of California (UBOC),  committed wire fraud in connection with the creation of a fraudulent $2.3 million lease agreement between UBOC and the University of California, Davis in 1999.  According to the affidavit, UBOC purportedly entered into the lease with U.C. Davis in March of 1999.  On its face, the lease agreement concerned U.C. Davis's purchase of over $2.3 million of fiber optic equipment and systems switches from a third-party vendor.

The affidavit alleges that the purported signatories to the lease have indicated that they did not sign the purported lease documents, and that their signatures were forged or that the supposed lease documents appear to have been altered.  In addition, the third-party vendor has explained that it has no record of the purported lease transaction, has no association with Citibank or Suisse Security, does not have any account matching the description in the purported wire instructions, and does not sell the type of equipment described in the lease.

The affidavit further alleges that in April of 1999, Armstrong directed $1.3 million to be wired from UBOC to an account at Suisse Security Bank and Trust in the Bahamas, purportedly at the direction of the third-party vendor.  According to the affidavit, Armstrong acknowledged that he signed each of the documents bearing his signature relating to this transfer.  The affidavit alleges that bank records for accounts associated with Armstrong then reflect numerous incoming wire transfers totaling over $125,000 from Suisse Security in 2000 and 2001.  The affidavit also alleges that wire transfers totaling over $285,000 from Suisse Security were used by Armstrong's now former wife to purchase a home in Maui in 2000.

According to the affidavit, Armstrong directed the remaining $972,000 of the purported lease amount to a suspense account at UBOC.  The affidavit alleges that funds from this account were used over a period of nearly two years to make seven purported periodic "payments" to UBOC as specified in the phony lease.  According to the affidavit, when UBOC did not receive the expected eighth "payment," UBOC realized the lease was fraudulent. 

The maximum statutory penalty for the charged violation of 18 U.S.C. § 1343 is 30 years imprisonment and a fine of $1 million, plus restitution.  However, any sentence following conviction would be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and would be imposed in the discretion of the Court.  A complaint simply contains allegations against an individual and, as with all defendants, Mr. Armstrong must be presumed innocent unless and until convicted.

Mr. Armstrong made his initial appearance in federal court in San Francisco on October 23, 2003.  Bail was set at $750,000.  The defendant's next scheduled appearance is at 9:30 a.m. on October 31, 2003 for identification of counsel and bond posting before Judge Edward M. Chen.

The prosecution is the result of an 18-month investigation by agents of the Federal Bureau of Investigation.  Haywood S. Gilliam, Jr. is the Assistant U.S. Attorney who is prosecuting the case with the assistance of legal secretary Jessica Chavez. 

All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matthew J. Jacobs at (415) 436-7181.