A former official of a now defunct bank in Almelund and the owner of a commercial development company will be sentenced for their roles in a $2.7 million bank fraud scheme.Daniel P. Richmann, 52, of Ramsey, former owner of Riverwoods Development Co., Inc., was sentenced on Tuesday, Aug. 17 in federal court. Last October, Richmann pled guilty to conspiracy to commit bank fraud.
John C. James, 58, of Lindstrom, the former chairman of the board of Town and Country Bank, Almelund, pled guilty last September to conspiracy to commit bank fraud and money laundering. He will be sentenced at a date yet to be determined.
During his guilty plea hearing last year, Richmann admitted that he and James used the bank as a private source of money, making loans that exceeded the legal lending limits of the bank, and concealed the true purpose of the loans by using nominees as the borrowers and preparing loan documents that contained materially false information.
According to information from the U.S. Attorneyís office, Richmann and James created the false appearance that so-called loans were being repaid when in fact the purported payments were made with the bankís own money in form of new loans made by the bank. Richmann used the funds for his companies.
The bank was declared insolvent on July 14, 2000 and the Federal Deposit Insurance Corporation took control of the institution. Several of the bankís assets were sold to other financial institutions.
In his sentencing this week, Richmann faces a maximum potential penalty of five years in prison and/or a $250,000 fine. He was sentenced by Judge John Tunheim.
The case is a result of an investigation by the FDIC Office of the Inspector General, the Internal Revenue Service-criminal investigation, and the FBI.
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