By O. Kay Henderson, Radio Iowa
Four Iowans have pleaded guilty to a scheme that prosecutors say led the U.S. Small Business Administration to lose more than $4.5 million on bank loans.
Three of the people who pleaded guilty worked for Valley Bank, based in the Quad Cities and shut down by regulators in 2014. Seventy-year-old Larry Henson of Davenport, the bank’s president, and two other bank employees have pleaded guilty to conspiracy to commit wire fraud affecting a financial institution. The president of a company that provided lending services to Valley Bank has pleaded guilty to the same charge.
According to a news release from the U.S. Justice Department, the group altered loan payment histories, renamed businesses and hid the fact that borrowers had previously defaulted on loans. Court records indicate the scheme involved getting the Small Business Administration to guarantee the failed loans. Each of the four defendants face a maximum sentence of 30 years in prison.
Valley Bank had six Quad Cities locations, plus banks or loan offices in Altoona, Ames, Clive, Ankeny, Pleasant Hill, Knoxville, Oskaloosa and Cedar Falls when regulators declared it “unsound” in 2014. Great Southern acquired the bank’s assets, but not its losses, estimated to be in the range of $81 million.