Yesterday the FDIC took depositions of borrowers who say Fred DeCaro Jr. and his son Fred DeCaro III committed serious lending violations while running now failed USA Bank. The publicly traded institution which focused on construction lending to some of Greenwich and New Canaan McMansion developers, was the subject of an investigative report I published at DealFlow Media this May. But nearly a year before I went to print the New Canaan Patch (an AOL Publication) had commissioned the same story from me and then decided not to run it because their Regional Editor was afraid it would upset their local advertisers.
On July 14th, 2010, a fresh out of journalism school Patch editor, Max Schlesselberg met with me in New Canaan to discuss the story angle and the documents/sourcing I had developed. I told him Peter Keller, who was then an executive at Bank of New Canaan, could be implicated in the alleged fraud for being aware of the DeCaros actions but did nothing to stop it. Schlesselberg had a monthly budget of only $500 to buy freelance work and appeared so excited about the story he offered me more than half of his budget, $300, to run it. I immediately began calling around the area notifying sources in town it was a go and asking for others in town to go on the record.
Within 24 hours though I got an odd email from Schlesselberg:
I spoke to my editor about the pitch, without mentioning any names, and he asked that I pass on the story. Unfortunately I’m going to have to obey and pass on it. However, I’d love to contract you on a piece about the closure of storefronts in downtown New Canaan. If that’s something you’d be interested in, we could definitely work something out. Sorry for having to pass on this, I was really excited by it too. Let me know about the storefront story.
Editor, New Canaan Patch
I spoke on the phone with Max about this the next day and asked what had happen. He said his regional editor was ‘too worried to rock the boat with local advertisers’. Bank of New Canaan was one of those advertisers. While it was disappointing to watch the local online publication turn away from the story for those reasons I knew I could sell it elsewhere. I kept watching the progress of a federal investigation into the failure of USA bank and saw the office of the inspector general for the FDIC bring their team into New Canaan to interview USA Bank whistleblowers and borrowers.
Schlesselberg didn’t last long as the editor of the New Canaan Patch and was replaced with an older New Canaan native Sheryl Shaker. After Shaker first started I had a short conversation with her about the story and she acted surprised a story like that was held. Shaker said “Oh no we would definitely want stories like that. I’ll get back to you when I talk to my editor.” But once again I got no response from the Patch team on running the story.
I sent an email to Shaker today asking if she’d like to comment again on why Patch held the story. I haven’t heard back from her.
Last October when I saw Business Insider run a series of stories on the journalism ethics problems at Patch (which ranged from plagiarism to political operatives being hired as editors) I decided to share my story with their team. Joe Pompeo wrote about the incident and when he went back to Patch’s press person, Janine Iamunno, to get a comment she responded the story was pulled because the sourcing wasn’t good.
Now when I heard that I knew someone at Patch was lying. First, the regional Patch editor never saw copies of my emails and documents to source the story. Second, I know the local New Canaan editor who saw a small part of my sourcing emailed me ‘great stuff’ after he reviewed it. I had people on the record willing to speak out about being interviewed by Federal agents regarding what they saw the Decaros do to alledgedly violate lending laws. What I don’t know is if the Patch pressperson, Iamunno, was just making up an excuse to cover their tracks or if the regional editor lied to cover his ass.
I called Max Schlesselberg on his cell phone when I saw the Patch’s response to the Business Insider story asking who he thought lied here but didn’t get a call back.
Business Insider has continued to do a bang up job on covering the problems at Patch. They recently broke news that Patch was asking local editors to help with ad sales. A total no-no for the Chinese wall that exists at most other publications between editorial and publishers.
The USA Bank story, which I ended up making a lot more money selling to DealFlow has made a big impact. It was followed by Connecticut WatchDog who said it was their most viewed story of the month and local Greenwich blogger Christopher Fountain got a big response from his readers when the story ran. After we went to print at DealFlow this May, more on record sources came forward explaining how Peter Keller, former executive at Bank of New Canaan, was also going to whistleblow to the FDIC in 2006 but backed out because he was afraid of what the DeCaros could do to him within the Fairfield County, CT banking community. Ruth Jones, a well known real estate developer who grew up in New Canaan and has an office in town was also on the record in my coverage stating she was given cash by USA Bank’s president to keep some of her loans paying and make the FDIC think the loan was current.
It’s clear there would have been lots of angles for the New Canaan Patch to cover with all the local players coming forward about USA Bank’s problems. It’s a story I’ve continued to report on and Greenwich Time recently figured out there are a lot of abandoned McMansions around Fairfield County because of the USA Bank lending problems. There are two other long time print newspapers in New Canaan who the Patch has to compete with for ad dollars and eye balls. I’m not sure what their editorial agenda or goals are these days but it appears they aren’t focused on impact reporting that informs the local readers about accurate news they can’t read elsewhere.