A former lender at National Penn Bank took the bank's money for his own use, then was shaken down by clients who threatened to expose him unless he arranged illegal loans for them, the bank claims in a lawsuit.

National Penn's complaint, made available Wednesday in the Court of Common Pleas in Philadelphia, claims former employee Edward G. Mawhinney of Sewell, N.J., masterminded a complex fraud scheme that stole more than $6.7 million from the bank between 2001 and late 2004.

Mawhinney was a vice president in National Penn's private banking office in Philadelphia. The bank claims he stole the identities of National Penn customers, including two of his sisters, to obtain fraudulent loans. He spent some of the money on a home and cars, the bank claims.

The lawsuit also names as defendants:

Mawhinney's wife, Jayne.

Two former National Penn employees who allegedly helped Mawhinney hide the scheme. Christine Duvall of Oxford, Chester County, was Mawhinney's administrative assistant, and John Ferraro of Oreland, Montgomery County, managed the office where he worked.

Five Philadelphia-area dental professionals. They are Michael Ayes and Richard Rush of Bala Cynwyd; Howard Koff of Jenkintown; Mitchel Blumenthal of Gladwyne; and Marc Ayes of Cherry Hill, N.J.

Six companies in which the dentists were business partners.

The suit claims Mawhinney routed more than $2 million in illegal loans to the dentists and their companies. The dentists, who allegedly threatened to expose his fraud, used the money to buy property and pay off a mortgage, the suit alleges.

Reached at her home, Jayne Mawhinney declined to comment. The other defendants could not be reached using home or business phone numbers.

Bank spokeswoman Cathy Bower also declined to comment. National Penn Bank is owned by National Penn Bancshares of Boyertown.

''There's little we can say beyond what's in the complaint,'' Bower said.

The complaint, filed Monday but not immediately available, gives the first public account of a scheme National Penn uncovered in January. The fraud forced National Penn to delay its year-end earnings announcement, and cost the bank $600,000 in legal costs in the first quarter. More costs are expected as the investigation continues.

The lawsuit does not involve National Penn's operations or employees in the Lehigh Valley. Also, no criminal charges have been filed, though the U.S. Attorney's office and the FBI are investigating.

According to the suit:

Mawhinney, who joined the bank in 1996, applied for loans using the names of National Penn customers. In some cases, he forged signatures and tax returns to make it look like the clients had enough income to be eligible for sizable loans.

Mawhinney created $1.8 million of false credit in the name of his sister, and another $500,000 in the name of his niece. Another $1.5 million was taken from legitimate and false credit lines in the name of another sister and brother-in-law.

Some of that money went to the dentists. Some of it — at least $500,000 — paid for his home, his credit card bill and other personal expenses. And some of it was used to make payments on the fraudulent loans, so they would not be discovered through delinquency reports.

The lawsuit does not explain Mawhinney's connection to the dentists, or why he allegedly began to give them money.

But the suit lists several cases in 2003 and 2004 in which Mawhinney forged loan documents, giving the dentists money for various purposes. Mawhinney did not have the authority to commit the bank to those lines of credit.

The bank claims the dentists knew the credit was not properly authorized, but used the money anyway. Irregularities in the paperwork show that the documents are forged, the bank added.

In December, Mawhinney left National Penn for another, unnamed employer. The lawsuit claims he spent his last two months with the bank arranging a string of bank checks and fraudulent deposits for some of the dentists and their companies.

The lawsuit also charges that Mawhinney took National Penn files with him, including documents related to the dentists' accounts.

The suit claims that National Penn employees Ferraro and Duvall called Mawhinney in January to tell him bank auditors were coming to check records at the Philadelphia office. Mawhinney brought back documents he had taken, and Ferraro and Duvall helped him destroy some of them, the lawsuit charges.

Duvall left the company in the same month as Mawhinney. Ferraro was terminated in January, the suit says.

National Penn is asking for at least $6 million in compensatory damages, unspecified punitive damages and repayment of all money taken through the fraud scheme. It also seeks liens on the Mawhinneys' home and two properties bought by the dentists, saying those buildings were acquired with money illegally taken from the bank

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