Mar.29, 2010, 6:37PM

BAYONNE -- A local bank agreed in federal court in Trenton today to forfeit $5 million after admitting it failed to report millions in illegal and suspicious financial transactions, authorities said.

Pamrapo Savings Bank pleaded guilty to conspiring to violate the Bank Secrecy Act, which requires financial institutions to help the government prevent money laundering.

"This case should send a strong message to banks that we will vigorously investigate and prosecute financial institutions that provide safe harbor to criminals," U.S. Attorney Paul J. Fishman said.

Federal law requires banks to file reports with federal authorities for every transaction over $10,000. The rule is designed to prevent banks from being used to launder money for narcotics traffickers, mobsters, terrorist financiers and other criminals.

During a hearing before Chief Judge Garrett E. Brown, Jr., Pamrapo admitted intentionally failing to file reports for $35 million in transactions. More than $5 million of those were transactions under $10,000 structured to evade the bank’s reporting obligations.

They include 586 checks, totaling $3.2 million, cashed at Pamrapo by Richard "Richie" Pellegrini. The bank contacted police after he bounced several checks. But afterward, a Pamrapo official met with Pellegrini, his attorney and a local law enforcement official, resulting in the investigation being placed on the "back burner," authorities said.

Pellegrini pleaded guilty in May 2008 to structuring money transactions to avoid reporting requirements.

State and federal banking regulators warned Pamrapo as early as 2004 that its anti-money laundering programs were deficient.

A lawyer for Pamrapo, Sotiris A. Planzos, said the illegal transactions were limited to Pellegrini. "Once the became aware of the problem it went to extraordinary measures to correct it," Planzos said.

Pamrapo is headquartered in Bayonne and has eleven branch offices in Hudson and Middlesex counties. The bank is in the process of merging with Bayonne Community Bank.

The bank faces up to five years probation and a $500,000 fine when sentenced May 6, assistant U.S. Attorney Anthony Moscato said.