Roseville Man Acquitted in Check-Kiting Scheme

The following report is based on a press release issued by the U.S. Attorney's Office in Minneapolis:

A federal jury on Friday (April 6) acquitted a Roseville man of all counts in a bank fraud trial but convicted two others in the alleged multi-million dollar check-kiting and loan scheme.

Following a 12-day trial, the jury convicted John Anthony Markert; 58, of Mendota Heights, the former president of Pinehurst Bank in St. Paul; with five counts of misapplication of bank funds.

George Leslie Wintz, Jr. 72, an area businessman and the bank customer, was convicted on two counts of bank fraud, and one count of theft from an employee benefit plan.

But the jurors acquitted Gregory Paul Pederson; 44, of Roseville, the bank’s former chief credit officer and senior vice president; on all counts.

Following the jury's decisions, U.S. Attorney B. Todd Jones said, “Confidence in the strength and integrity of our financial institutions is critical to building strong communities. We respect the jury’s decision in this case and will continue to vigorously prosecute those who engage in fraud and deception for their own personal enrichment at the public’s expense.”

Evidence presented at trial showed that from March 6, 2009, through January 29, 2010, Markert concealed Wintz’s check-kiting scheme by putting in place a series of fraudulent loans. The five loans, totaling $1.9 million, were issued to straw borrowers for the purpose of covering $1.85 million in overdrafts resulting from bad checks written by Wintz as part of his check-kiting scheme.

Check kiting occurs when someone intentionally writes a check for a value greater than the account balance and then writes another check from a different account with non-sufficient funds to cover the over-drawn account. Through the scheme, account balances are falsely inflated, allowing the kiter to use non-existent funds to cover payment of debts and purchases.

Wintz kited increasingly larger-dollar bad checks between Pinehurst Bank and another bank, not named in the charging documents, until late February of 2009, when the second bank discovered the  scheme and returned over $1.8 million in bad checks to Pinehurst Bank.

While Markert took steps to conceal from the bank’s board the true nature of the five loans made to the straw borrowers, the scheme was nevertheless uncovered in January of 2010, during an independent audit. At that time, the bank terminated Markert and Pederson. The bank was then required to declare the loans as losses, rendering the financial institution undercapitalized
and forcing it to be closed by regulators in May of 2010.

Furthermore, from May of 2009 through at least October of 2010, Wintz allegedly embezzled more than $160,000 from the 401(k) account at Triangle Warehouse, Inc., a company he owned. The 40l(k) account was maintained with employee payroll contributions for the purpose of postretirement payouts. Wintz, however, used the funds to pay company bills and repay the straw
loans as well as for his personal benefit.

For their crimes, the convicted defendants face a potential maximum penalty of 30 years in prison on each count of bank fraud and misapplication of bank funds.

In addition, Wintz faces a potential maximum penalty of five years for theft from an employee benefit plan. United States District Court Judge Ann  Montgomery will determine their sentences at future hearings, not yet scheduled.