Former Bank Executive Charged For Role in $15 Million Bank Loan Scheme

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https://www.justice.gov/usao-ks/pr/former-bank-executive-charged-role-15-million-bank-loan-scheme

Department of Justice
U.S. Attorney’s Office
District of Kansas

FOR IMMEDIATE RELEASE
Friday, December 1, 2017

Former Bank Executive Charged For Role in $15 Million Bank Loan Scheme

WASHINGTON – A former Kansas bank executive was charged in an indictment filed today for his participation in a bank fraud scheme to obtain a $15 million construction loan from 26 Kansas banks based on allegedly false information contained in the loan documents.
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Troy A. Gregory, 50, of Lawrence, Kansas, was charged in an indictment filed in the District of Kansas with one count of conspiracy to commit bank fraud, four counts of bank fraud, and two counts of false statements.

According to the indictment, 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. The indictment alleges that 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.