Fraud Friday — Bank of Oswego Fraud Results — Community Bank CEO gets 24 months, CFO gets 18 months

June 15, 2018

By Bob Coleman
Editor, Fraud Friday

Fraud Friday — Bank of Oswego Fraud Results — Community Bank CEO gets 24 months, CFO gets 18 months

Diana Yates

Dan Heine

Announced yesterday.

“Dan Heine and Diane Yates orchestrated one of the largest and most complex bank fraud schemes in Oregon’s history. Their selfish acts of greed are deplorable,” says Billy J. Williams, U.S. Attorney for the District of Oregon. “While we urged the court to impose longer sentences, these sentences still serve as a warning to bank executives and others entrusted with fiduciary responsibilities. We will continue to work with federal investigators to protect investors and ensure the trustworthiness of our financial institutions.”

“For centuries, the American banking system has served as the bedrock of the U.S. economy. Honest bankers are critical to our financial system. By addressing lies and conspiracies at the Bank of Oswego, the FBI and Department of Justice have helped re-establish the integrity of the financial system we all rely on,” says Renn Cannon, Special Agent in Charge of the FBI in Oregon.

A jury convicted Dan and Diana of one count of conspiracy to commit bank fraud and twelve counts of falsifying bank entries, reports, and transactions in a trial ending in November 2017.

Key testimony came from a rogue employee, Geoff Walsh who was a rainmaker mortgage banker hired to build the bank’s loan portfolio during the Great Recession.

Discovered that he was running a hard-money lending scheme on the side while at the bank he was fired. His unethical loan dealings were reported to the FBI in 2012. However, the CEO and CFO quickly found themselves targets by the FBI for bank fraud after Geoff flipped.

Dan Heine, 71, a co-founder of the bank, was president, CEO and member of the board of directors from September 2004 through September 2014. Diana Yates was executive vice president, CFO, and secretary of the board of directors from 2004 through March 2012.

The Feds say Dan and Diana concealed the true financial condition of the bank to regulators and the board of directors by falsely reporting that the bank had title to a property in a straw buyer transaction, falsely reporting that delinquent loans were paid, and falsely reporting the sale of bank owned property.

Reports Anthony Macuk of the Lake Oswego Review:

U.S. District Court Judge Michael Simon also fined the former executives $1,300 each and required both to serve three years of supervised probation after their release. They were ordered to begin serving their sentences on Sept. 12, following an appeals hearing scheduled for Aug. 7.

Simon imposed several conditions on the defendants’ supervised probation, including restrictions on their future financial dealings; both will be required to get approval from their probation officer before applying for credit or taking out a loan. Yates also was ordered not to drink or go to bars without permission once she leaves prison.

Geoff Walsh was sentenced to 30 months in a federal penitentiary last February.

See previous Coleman Report reporting here:

Fraud Friday — Geoff Walsh Gets 30 Months in Bank of Oswego Fraud — 2/09/18

Fraud Friday — Oregon Community Bank CEO and CFO Guilty of 13 Counts of Bank Fraud — 12/1/17

Fraud Friday — Geoff Walsh Guilty — 7/24/15

Fraud Friday — Bank of Owsego Indictments — 7/6/15

Fraud Friday — Community Bank CEO & CFO Arrested for Hiding Bad Loans from the FDIC — 6/29/15