A former Kansas bank executive was sentenced to five years in prison for fraudulently seeking a $ 15 million building loan from 25 Kansas banks.
A district court also ordered 53-year-old Troy Gregory of Lawrence, Kansas, to pay $ 4.7 million in restitution. The United States Department of Justice reports.
Gregory was the head of a bank that made millions of dollars in loans to a group of borrowers. Later they began to have problems with payments to the bank.
In late 2007, Gregory initiated a $ 15.2 million loan process to build a residential complex to the same group of borrowers so that they could pay off other outstanding loans.
Gregory’s bank shared this loan with 25 other Kansas banks.
In order to convince other banks to take part in this, Gregory made false documents on the solvency of the borrowers. For example, it falsely claimed the existence of about $ 1.7 million in certificates of deposit as collateral for a loan.
The fraud became known after the collapse of the housing market, which led to the fact that the cost of apartments in the newly built residential complex was lower than expected, and the loan was unpaid.
The victimized banks, which would not have participated in the loan without Gregory’s false assurances, were forced to write off debts and lost approximately $5 million on this fraudulent loan.