Convict views court records and splits

A convicted bank swindler, summoned to U.S. District Court Tuesday for a parole violation, didn’t stick around to see the judge and boldly walked out of a courtroom filled with FBI agents, deputy U.S. marshals and federal probation officers.

John Earl Petersen, who voluntarily showed up in the courtroom of Magistrate Judge Cynthia Imbrogno for a 2 p.m. hearing, apparently saw court papers indicating he was about to be arrested and sent back to prison for violating terms of his supervised release.

But before the handcuffs could jingle, the dapper-looking Petersen left the U.S. Courthouse, jaywalked across Riverside Avenue to his parked 2007 black Cadillac and roared away.

While Petersen and his attorney Bevan Maxey know why he was about to be arrested, a clerk for the magistrate judge said the court documents related to the case couldn’t be released to the public until he’s taken into custody.

At the end of the court day, red-faced federal officials were wondering who was going to arrest Petersen.

He is the confessed mastermind behind the $11 million collapse of a Montana bank in the mid-1990s, and was labeled by investigators at the time as an “organized crime figure.”

There are indications in other court records that Petersen’s latest transgressions again may involve fraud or theft.

First Assistant U.S. Attorney Tom Rice said Tuesday he couldn’t publicly comment on the case and the new allegations until Petersen is arrested.

“He showed up, read some papers and then fled the courtroom,” an exasperated-sounding Rice told the judge. “He’s no longer here.”

Maxey, given a ride to the courthouse by Petersen, said he’d have to find another way back to his North Side law office.

Petersen, 54, was hauled into court in March 2006 for violating conditions of his supervised release, which puts him under court supervision through next May. He avoided going back to jail then by promising to abide by the conditions, including providing financial information and avoiding use of liquor and drugs.

He was cited again on Nov. 28 for again violating supervised release.

Public documents filed in connection with those violations say Petersen had failed to make his $2,000-a-month restitution payments to the court for the nearly $2 million he owes for his part in the Montana bank fraud. He also is accused of failing to provide documents about the current source of his income.

Petersen has been living in the South Hill home of his 95-year-old aunt and apparently using her bank account to lavishly remodel the residence, after moving her to a nursing home, a U.S. probation officer said in a court affidavit.

Petersen had large, flat-screen TV monitors installed in nearly every room of the house, “including a refrigerator equipped with a flat screen television monitor in the door,” the affidavit said.

He was identified as the kingpin behind the fraud scheme that led to the collapse of Mountain Bank of Whitefish, Mont.

After his arrest by FBI and IRS agents, Peterson agreed to rat out a half-dozen officials of the bank who accepted bribes from him and became complicit in the fraud scheme. They all got lengthy prison terms.

Peterson pleaded guilty to conspiracy, bank fraud and money laundering, and was sentenced to 108 months in prison. But because he agreed to testify against his former co-conspirators, his sentence was reduced to 60 months by Judge Fred Van Sickle, who followed the recommendation of federal prosecutors.

Petersen personally pocketed $6.5 million in the scheme, and lived like a millionaire playboy for years in Spokane. Several of his assets were seized, but much of the money Petersen swindled from the Montana bank never was accounted for or located.

He also was involved in loan-sharking and hired a man convicted of attempted murder to collect debts, according to documents filed in the 1998 case.

Petersen is a known associate of Cheryl Mae Larson, a 49-year-old Spokane escort business owner, according to court records. She pleaded guilty last summer in Spokane County Superior Court to money laundering, three counts of second-degree promoting prostitution and possession with intent to distribute cocaine.

Now serving a two-year prison term, Larson recently was tied to Cody Castagna, a young Spokane man suspected of trying to extort state Rep. Richard Curtis, who resigned over the sex scandal.