A Spokane businessman is a key figure in a $10.5 million Montana bank-fraud scheme, according to court documents unsealed Friday.
John Earl Petersen, president of JC Investments Group Inc., is accused of conspiring to embezzle the money with four officers of Mountain Bank of Whitefish.
Over six years, the bank’s accounts were drained and the officers tried to conceal that fact with deposits of “fraudulent and worthless” checks, federal investigators say.
Authorities have seized millions of dollars of assets to recover the losses - picked up by taxpayers through the Federal Deposit Insurance Corporation (FDIC).
Seizures include a $250,000 home on High Drive in Spokane, jewelry, vehicles, a boat and hundreds of acres slated for development in Montana and Arizona.
Petersen, 45, is not charged in a federal indictment unsealed in Missoula, but is named as a co-conspirator in the case.
“We won’t be making any comment as to why he wasn’t charged in this indictment, but I can tell you the investigation continues,” said Assistant U.S. Attorney Carl Rostad in Great Falls.
Petersen and others are expected to be charged in a separate indictment being sought by Justice Department fraud prosecutors in Washington, D.C.
“I thought I’d be indicted today,” Petersen said when contacted Friday outside his home on East 24th. “We knew this was happening and we’re not surprised.”
He denied any involvement in the alleged scheme.
“I wasn’t involved, absolutely not,” he said. “My name was used and my accounts were used. No, scratch that. That’s a lie.
“The bottom line is I’ve got plenty to say when the time comes,” Petersen said.
Asked the nature of his business, he said: “I’m involved in investment opportunities, real estate. Strike that, too. That’s a lie. Just say I’m a businessman and have been since 1985.”
Those indicted included Werner E. Schreiber, 50, a prominent Kalispell-area businessman who was president and chief executive officer of Mountain Bank.
Also indicted were Marlene I. Havens, 61, former senior vice president of the bank; and Lynn D. Foster, 45, and Kathleen McGrath Rommereim, 48, both former vice presidents.
Mountain Bank was sold to First Interstate last year, shortly after federal investigators began handing out grand jury subpoenas, compelling testimony and seizing records.
The indictment accuses Schreiber and the other bank officers of a conspiracy that lasted from September 1990 through last October.
The four bank officers are charged with conspiracy to commit financial institution crimes, bank embezzlement by officers and employees, and false entries with intent to commit bank fraud.
They’re also charged with false statements to the FDIC, bank fraud and money laundering.
The fraud took various forms, the indictment alleges.
Between 1990 and 1996, Mountain Bank executed 57 transactions, including wire transfers or accepting checks on insufficient-funds accounts, causing a $5.9 million loss to the bank.
While that was occurring, the conspirators deposited checks from JC Investments, according to the indictment. Those transactions cost Mountain Bank millions more, according to the indictment.
When the bank ran out of money, Schreiber, Havens and Petersen “devised a scheme whereby fraudulent and worthless checks would be deposited” into its accounts.
This check-floating scheme “created the appearance that the bank had sufficient financial liquidity and capitalization to continue operation and to conceal their embezzlement of bank money from auditors, examiners and other employees of the bank,” the indictment says.
Between February 1992 and June 1995, Petersen “signed 109 checks to be used to manipulate the financial condition of Mountain Bank.”
The indictment culminated several years of investigation in Montana and Washington by the FBI, the Internal Revenue Service, the U.S. Customs Service, Whitefish police and a regional drug task force.
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