Fraud Friday — 78 Months for $3 Million Bank Director Fraud

October 30, 2015

By Bob Coleman
Editor, Fraud Friday

Fraud Friday — 78 Months for $3 Million Bank Director Fraud

A former community bank director and majority shareholder of two community banks is going to jail for bank fraud.

Richard Gregg will serve 78 months in prison for collateral conversion and bankruptcy fraud.

In February 2009, Gregg borrowed $2 million from Great Southern Bank in Springfield, using 160,000 shares of stock for First Homes Savings Bank, as collateral.
Gregg physically deposited the stock certificate with Great Southern Bank.

But, on May 6, 2009, Gregg checked out the original FBSI stock certificate from Great Southern Bank, using as a pretext the stated purpose of separating the large certificate into multiple smaller certificates. At that time, the loan from Great Southern Bank had a balance of $1,511,194.

Gregg signed a trust receipt promising to return the stock certificates to the bank within 30 days. Gregg, however, chose not to return the stock certificates to Great Southern Bank and instead used the funds for other purposes.

On May 7, 2009, Gregg deposited the collateralized FBSI shares into his account at Scottrade. On May 28, 2009, Gregg borrowed $440,000 from Scottrade, from the margin account on which he used the FBSI stock as collateral.

In the end, Great Southern Bank “charged off” $2,316,264 on Gregg’s loans.

Bankruptcy Fraud

While Gregg was already under indictment for bankruptcy fraud relating to the bankruptcy petition of his corporation he filed a personal bankruptcy petition that contained numerous false declarations and concealed fraudulent transfers of property.

Gregg transferred his interest in two parcels of real estate, a 97.2-acre tract and a 6.4-acre tract. Gregg also filed $250 million in bogus liens on his real and personal property in order to keep them out of the hands of his creditors.

Other Crimes

In addition to the two counts to which he pleaded guilty, Gregg previously admitted to other crimes.

In one bank fraud scheme, in 2008 Gregg defrauded Southwest Community Bank by selling the bank a piece of commercial real estate for $1,551,9440, when it was worth less than half that amount. Gregg did not disclose to the other bank directors that he had purchased that property for $775,000 a few months earlier, nor did he disclose that two appraisals had been conducted on the property in recent months.

One appraisal valued the property at $762,000. The second appraisal was canceled when Gregg disagreed with the preliminary work. After Gregg canceled the appraisal, he had the bank order an appraisal of the Fremont property by another appraiser, who valued the property at $1,580,000. Gregg did not disclose to the bank that this appraisal was not an independent valuation of the property, but rather was something Gregg had, in essence, directed.

In another bank fraud scheme, Gregg used collectible automobiles as collateral to obtain loans, then sold the cars without paying back the loans.

Gregg also admitted prosecutors could prove he committed wire fraud related to bounced checks at two casinos in Oklahoma. On Jan. 3, 2012, Gregg presented five checks, payable to Buffalo Run Casino in Miami, Okla., each in the amount of $10,000, knowing his credit union account contained insufficient funds to cover those checks.

Between Feb. 16 and March 1, 2012, Gregg presented five checks payable to Downstream Casino and Resort in Quapaw, Okla., in the total amount of $60,000, knowing his bank account contained insufficient funds to cover those checks.

Some of Gregg’s criminal conduct occurred while he was on bond and while he was incarcerated.

Following his indictment in 2013, Gregg was released on a personal recognizance bond.

But, his bail was revoked after prosecutors obtained and recordings of Gregg’s telephone conversations and prison visits.

The recordings revealed Gregg conspired with others to commit new crimes from jail.