WASHINGTON (RELEASE) The Department of Justice says a former Kansas bank executive was charged in an indictment filed on Thursday for his participation in a Kansas bank fraud scheme.
Government officials made the announcement that 50-year-old Troy A. Gregory of Lawrence, Kansas was charged in an indictment that says he tried to obtain a $15 million construction loan from 26 Kansas banks based on allegedly false information contained in loan documents.
The indictment was filed in the District of Kansas court with one count of conspiracy to commit bank fraud, four counts of bank fraud, and two counts of false statements.
Gregory was a bank executive and loan officer who had made millions of dollars in loans to a group of borrowers who were struggling to make payments on the loans.
According to the indictment, beginning in approximately late 2007, Gregory began the process of making a $15.2 million construction loan to build an apartment complex to that same group of borrowers. The indictment further alleges that Gregory’s bank shared this loan with 25 other Kansas banks.
Gregory allegedly made or caused others to make false statements to the banks about the strength of the borrowers, the debt status of the apartment property and the existence of approximately $1.7 million in certificates of deposit for collateral on the loan, all to get the loan approved.
Instead of using the loan funds promised for building the apartments, Gregory allegedly immediately diverted over $1 million of the loan to pay for part of the certificates of deposit pledged as collateral, pay off debt on the apartment property and make payments on unrelated loans.
Other Kansas banks that shared in this loan allegedly would not have participated in the loan without the false representations and promises.
The indictment alleges that the banks ultimately wrote off millions of dollars on the $15.2 million construction loan.