Convicted Bank of Oswego execs get light sentences in conspiracy case

Updated at 7:27 p.m.

The two top executives of the now-defunct Bank of Oswego caught a huge break Wednesday, when a federal judge in Portland gave them far less prison time than prosecutors wanted.

U.S. District Court Judge Michael Simon sentenced Dan Heine to 24 months in prison. Diana Yates was sentenced to 18 months. That was a fraction of what federal sentencing guidelines called for. Earlier in the day, the judge said he had determined that the advisory sentence range for Heine was from nine to more than 11 years. The advisory range for Yates was more than seven years to nine years.

Heine and Yates will do less time than Geoff Walsh, the Bank of Oswego loan officer who turned state’s evidence and provided federal prosecutors with key evidence and testimony against his former bosses.

Federal judges have wide discretion and are not required to follow the guidelines.

Prosecutors and other federal agents, who worked the case for four years, were disappointed with the light sentence.

“Dan Heine and Diane Yates orchestrated one of the largest and most complex bank fraud schemes in Oregon’s history. Their selfish acts of greed are deplorable,” said Billy J. Williams, U.S. attorney for the District of Oregon. “While we urged the court to impose longer sentences, these sentences still serve as a warning to bank executives and others entrusted with fiduciary responsibilities. We will continue to work with federal investigators to protect investors and ensure the trustworthiness of our financial institutions.”

A jury convicted Heine and Yates of one count each of conspiracy to commit bank fraud and 12 counts each of falsifying bank entries, reports, and transactions in a trial ending in November 2017. A grueling seven-week trial concluded last fall.

Heine, a co-founder of the bank, was president, chief executive officer and member of the board of directors from September 2004 through September 2014. Yates was executive vice president, chief financial officer, and secretary of the board of directors from 2004 through March 2012.

During the conspiracy Heine and Yates concealed the true financial condition of the bank to regulators and the board of directors by falsely reporting that the bank had title to a property in a straw buyer transaction, falsely reporting that delinquent loans were paid, and falsely reporting the sale of bank owned property.

The Oregonian/OregonLive first reported the bank was involved in questionable transactions and was concealing its true financial condition in April 2015. Two months later, Heine and Yates were indicted.

Both Heine and Yates repeatedly said the real villain in the Bank of Oswego debacle was Walsh. Most of the underhanded loan schemes that marked the bank’s last years were put together by Walsh.

Prosecutors, who had relied heavily on Walsh to make their case, said that was nonsense. At least Walsh accepted responsibility for what he did and pleaded guilty, said Michelle Kerin, the lead prosecutor on the case.

Heine literally begged Simon for mercy during Wednesday’s all-day hearing. “Your honor, I stand before you humbled and completely devastated,” Heine said. “Being convicted of a crime has shattered me.”

Heine’s lawyer, Jeffrey Alberts, said his client was broke and is about to lose his Florida condominium to foreclosure.

Heine, 71, argued that the seven- to nine-year sentence recommended by prosecutors could well result in him spending the rest of his life in prison. “There is no next chapter for Mr. Heine, this is it,” Alberts said.

Prosecutors argued that Heine’s claims of his advancing age are a bit overdone. They included in their sentencing memo a link to the Pelican Bay Tennis Club in Naples, which showed that Heine is an accomplished tennis player (rated 4.0 by the U.S. Tennis Association) who plays weekly.

Janet Hoffman, Yates’ attorney, said her client’s “nanosecond of bad judgment” shouldn’t overshadow the “exemplary life” she lived. Of the improper steps that she took, Yates said that it was to “save the bank I built and loved.”

“I take full responsibility for what I did,” Yates added.

Neither Heine nor Yates had a criminal record until this case.

Simon didn’t tip his hand before sentencing that he was going to veer dramatically from federal sentencing guidelines. But it swiftly became apparent as he began his remarks that the defense lawyers’ arguments had hit home.

“Neither defendant directly tried to line their pockets,” he said. Rather, “it was an indirect effort to mislead the board of directors and the FDIC.”

Simon ordered Heine to report to the Bureau of Prisons to begin his sentence on July 26.

Defense lawyers mentioned their plans to appeal the case several times during Wednesday’s hearing. It’s unclear what their plans are.

A forfeiture and restitution hearing has been scheduled for Aug. 7.

— Jeff Manning

This article originally appeared here via Google News