February 9, 2018
By Bob Coleman
Editor, Fraud Friday
Fraud Friday — Geoff Walsh Gets 30 Months in Bank of Oswego Fraud
Back in 2012 community bank CEO Dan Heine called in the FBI after discovering his rainmaker banker had gone rogue. Walsh flipped and soon the CEO and CFO were arrested for their part in covering up bad loans to the regulators.
Those two were convicted on 13 counts of bank fraud last December. Geoff was instrumental in their conviction spending 6 days on the witness stand.
Geoff’s day of reckoning? His attorney wanted 12 months of home detention.
Writes Jeff Manning of the Oregonian:
U.S. District Court Judge Michael Simon acknowledged the pivotal role that Walsh played in the Heine/Yates trial. But he added the 30-month sentence recognizes the role he played.
Simon went on to say that the fraud that Walsh pleaded guilty to “is a very serious crime.”
The charges against Walsh came not from his activities at the bank, but rather a private real estate transaction he put together to invest in two condominiums in La Quinta, Calif. Walsh borrowed about $1.2 million from two people to buy the residences. Then, when times got tight, he sold the condos, failed to inform his investors, and pocketed the proceeds.
One of the victims was an elderly woman recently widowed. “She was particularly vulnerable and she was taken advantage of,” Simon said.
David Angeli, Walsh’s attorney, characterized him as a perennial outsider in his hometown of Lake Oswego. He grew up lower middle-class in a dysfunctional family surrounded by affluence. That background resulted in a manic drive to become wealthy and to hang out with wealthy friends.
He became one of the most active mortgage lenders in the state. At his peak, he had the resources to close a six-figure deal on a handshake.
The Bank of Oswego hired him hoping some of Walsh’s work ethic would rub off on the sleepy community bank.
But the chemistry never worked. Heine purported to be horrified by Walsh’s fast and loose business style. Walsh, for instance, conducted his own side-business of hard-money lending. For his borrowers who didn’t qualify for traditional bank financing, Walsh had a network of wealthy locals — divorce lawyer Jody Stahancyk, one-time gubernatorial candidate Chris Dudley and Portland developer Marty Kehoe, among others — who would make the loan.
Both Stahancyk and Dudley wrote letters to the court attesting to Walsh’s character and urging a lenient sentence.
The criminal case began when Heine called in the FBI claiming that Walsh was up to no-good. The bank fired Walsh in May 2012. The pressure of sudden unemployment and living the life in Lake Oswego drove Walsh to buy the California condos with other people’s money, argued David Angeli, Walsh’s lawyer in a 44-page sentencing memo. And it was that transaction that, ultimately, led to the criminal fraud charges.
The 30-month sentence may not be good news for Heine and Yates. Rather than cooperate, they fought the federal charges to the bitter end. So they will not be entitled to the sentence reduction that Walsh got for accepting responsibility and providing substantial assistance to the government.
Their sentencing is scheduled to take place on March 5.
See previous Coleman Report reporting here.
Fraud Friday — Geoff Walsh Gets 30 Months in Bank of Oswego Fraud — 2/09/18