Starbuck man sentenced for conspiring to commit bank fraud, money laundering
MINNEAPOLIS - A 55-year-old Starbuck man was sentenced in federal court in St. Paul on Friday, Dec. 2, 2011 for conspiring with others to steal more than $1 million in loan proceeds from the First Bank of Kensington.
William Felix Schluter was sentenced to one year in federal prison on one count of conspiracy to commit both bank fraud and money laundering. Schluter was charged on Sept. 4, 2010 and pleaded guilty on June 17, 2011.
In his plea agreement, Schluter admitted that from 2002 through 2006, he conspired with an unnamed individual to obtain money fraudulently from the bank through the use of straw borrowers.
In accordance with laws and bank policies, restrictions exist on the loan amounts allowed to any one borrower, and Schluter and the companies he owned had reached those limits. To bypass them, however, Schluter arranged for straw borrowers to apply for loans and then transfer the loan proceeds to business concerns owned by him. Many of the straw borrowers were companies that had no ability to repay the loans.
Schluter also commingled various funds, including deposits and loan repayments, among his various ownership interests in an effort to cover up the conspiracy. In furtherance of the scheme, Schluter and the unnamed individual created and submitted to the bank false loan-purpose statements as well as falsified bank records. Once the loan proceeds were secured, Schluter used them for his personal use.
Specifically, on Sept. 28, 2005, Schluter submitted a false loan-purpose statement to the bank in order to obtain a $174,431 loan in the name of a straw company called Baja Development Corporation. Then, later that day, the loan proceeds were transferred to an entity he owned; and, ultimately, the money was used for his own benefit and for the benefit of his companies. The total estimated loss amount from this scheme was between $1 million and $2.5 million.
This case was the result of an investigation by the Internal Revenue Service-Criminal Investigation Division, the Federal Bureau of Investigation, and the Federal Deposit Insurance Corporation. It was prosecuted by Assistant U.S. Attorney Nicole A. Engisch.