Reaping the profits from selling buses without paying off the loans that originally acquired the transports has earned an Illinois man three years in prison after admitting bank fraud, the federal insurer of bank deposits said Tuesday.
The agency said the fraud resulted in a $4.2 million loss to the banks.
In a release, the Federal Deposit Insurance Corp. (FDIC) said Wayne H. Kruger, 73, of Litchfield, Ill., received the sentence after pleading guilty last week to three counts of bank fraud. Kruger entered the plea in February.
According to the FDIC, Kruger admitted that, starting in December 2010 and continuing through May 2012, he hatched and executed schemes to defraud several Illinois banks. The agency said that Kruger, president and owner of a bus dealership (Ponder Equipment Co.), sold buses “out of trust.” The practice, the FDIC said, involves peddling a bus that has been paid for with loan proceeds but failing to use the sale proceeds to pay back the lender. “When Kruger sold a bus and failed to repay the associated loan, the relevant bank was unable to seize the loan collateral because it no longer existed as an asset of the business,” the agency said.
At sentencing, U.S. District Court Judge Richard Mills said Kruger’s scheme affected small banks in communities built on personal relationships and trust. The judge also ordered restitution for three banks in the amount of $4,185,957.
Banks affected by the fraud, the FDIC said, included: Carlinville, Ill., National Bank and Trust Company; the State Bank of Cerro Gordo, Ill.; and the State Bank of Bement, Ill.