|Bank fraud, bribery charges filed against local bankers, businessmen
|Posted: Thursday, February 18, 2010 7:22 pm
PULASKI COUNTY, Mo. (Feb. 18, 2010) — Two former bank vice-presidents, numerous Pulaski County businessmen, and the former branch manager of the Small Business Administration’s office in Springfield face federal charges in connection with what prosecutors say were “at least 31 fraudulent business loans ranging from $100,000 to $1.6 million” and totaling more than $10.1 million.
Federal prosecutors say Mid-America Bank officials committed more than $10 million worth of bank fraud.
Federal District Attorney Beth Phillips announced to media on Wednesday that she has filed charges against 16 people in connection with the loans, issued by Mid-America Bank and Trust in Pulaski County between January 2005 and January 2007.
Other charges include making false statements to the bank and to the federal Small Business Administration in connection with a loan, money laundering, bank bribery, false bank entries and misappropriation of loan funds.
Local defendants include:
• two bank officials, Richard N. DeLong, 44, of Newburg and Melinda L. Reese, 37, of Dixon,
• Gerald E. Harris, 68, of Edgar Springs, owner of Harris Land Development and Gerald Harris Construction,
• Michael Edward Clegg, 48, of St. Robert, the president of Heintz Lighting One and Appliance, and his daughter Andrea M. Clegg, 25, of Laquey,
• Perris D. Rask, 67, of Licking, owner of Circle R Saloon, Inc., which ran the Rockin R Saloon and Adonia’s Steak and Seafood in St. Robert,
• Lindell L. Vawter, 65, of Rock Island, Ill., owner of Vawter, Inc., which did business as A&W Root Beer/Long John Silver’s restaurant in St. Robert.
According to the sealed indictment issued Feb. 5 by a federal grand jury and made public Wednesday after the arrest of one of the defendants, DeLong had been the executive vice president and chief lending officer at Mid-America Bank and Trust during the time of the alleged conspiracy; Reese was the bank’s vice-president and loan compliance officer.
The indictment says that the businesses controlled by Clegg, Rask and Vawter were all “failing businesses and had outstanding (Mid-America Bank and Trust) loans with significant past-due balances.”
The indictment accuses DeLong and three other people, George G. Spencer, 53, and Dennis K. DePriest, 55, both of Ozark, and Larry Steven Aduddle, 63, of Springfield, the branch manager of the Small Business Administration’s Springfield office from March 2005 to May 2007, of having “participated in a conspiracy to obtain loans from (Mid-America Bank and Trust) and to defraud the Small Business Administration” by “participating in a bank fraud scheme to fraudulently obtain loans from (Mid-America Bank and Trust) to obtain federal SBA loans “that were designed to provide financial assistance to small businesses.”
According to the indictment, the bank fraud happened because “DeLong allegedly made loans and issued lines of credit to nominee borrowers,” including businesses run by Spencer, Harris and a third person, “in order to conceal unbooked letters of credit that he had issued in the name (of the bank).”
In addition, the indictment accuses DeLong of making additional loans to three other people, Daniel J. Metz, 65, of Eldon, Randall S. Rogers, 41, of Springfield, and Catherine S. Debar, 42, of Rolla, who also face charges in separate but related indictments returned by a federal grand jury on Dec. 17.
“In each case, the indictments allege the defendants were nominee borrowers—that is, borrowers in name only, for loans that were secretly for the benefit of others,” Phillips said in a prepared statement. “They allegedly claimed the loans would be used for legitimate business purposes, when in reality the loans were made to benefit others and for other purposes.”
Phillips said those three people received loans from DeLong “in order to conceal improvident loans, previously made nominee loans and nominee lines of credit, and to cure overdrafts.”
The board of directors of Mid-America Bank and Trust did not realize the problems, according to Phillips, because DeLong “allegedly structured loans to avoid scrutiny of those loans” by the bank’s board of directors and because “DeLong made false entries in the records (of the bank) to conceal disbursements of bank funds and past-due loan payments of distressed borrowers.”
Spencer and DePriest’s role was that they and others “organized limited liability companies solely as nominee borrowers” and “recruited nominee borrowers” to funnel the bank loan proceeds that had been guaranteed by the Small Business Administration “to themselves and others,” according to Phillips.
In addition, the indictment says that “as part of the conspiracy,” Spencer, DePriest, and James Stewart (“Stu”) Dunlop Jr., 55, of Springfield, “prepared fraudulent Small Business Administration borrower applications” which led to DeLong and others misapplying bank loan proceeds, some guaranteed by the SBA, and “diverting those proceeds to Spencer, DePriest and others.”
Dunlop was indicted separately on Dec. 17 on charges that he “concealed his ineligibility for a Small Business Administration loan and that he conducted financial transactions to conceal the proceeds of the related bank fraud scheme.”
The indictment released Wednesday also accused Spencer of paying a $7,500 bribe to DeLong in order to receive a $195,000 business loan from Mid-America bank.
Others indicted in the case included Keith David Miller, 54, of Republic, who is a former mayor of that city near Springfield and owned and operated RadiusCom Corporation, which provided wireless Internet service in Republic.
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THIS ARTICLE: Bank fraud, bribery charges filed against local bankers, businessmen
Posted: Thursday, February 18, 2010 7:22 pm
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