ANCHORAGE (AP) -- A federal jury on Thursday convicted H. Derrell Smith, former president of Alaska Statebank, of two felonies in connection with an $85,000 bank loan, according to prosecutors.
Smith was convicted of misapplying bank funds and falsifying bank records. Prosecutors say Smith persuaded other bank customers to obtain a loan for his benefit after the bank refused him a loan for remodeling a house.
Smith was the second Alaska Statebank executive convicted in the last few months.
Ralph E. Whitmore Jr. was convicted in December of 24 counts of bank fraud and other misuse of his position at the failed financial institution.
Smith and Whitmore were first tried last June and were acquitted on several fraud counts. But the jury deadlocked on dozens of other criminal charges after six days of deliberations.
The case dates back to the mid-1980s, when Alaska's overheated economy was devastated by low oil prices. The resulting crash in real estate values helped drive 14 banks -- among them Alaska Statebank -- out of business.
Alaska Statebank, once the seventh largest bank in the state, failed in 1989.
Five bank executives were charged with fraud and conspiracy for allegedly making the insider loans and issuing inflated dividend payments when the bank was losing money.
Former director William Swain paid a $350,000 settlement after pleading guilty to two federal bank fraud counts. Ex-director Robert Ely pleaded guilty to one count of misapplying bank funds. A third director, Thomas Miklautsch, disappeared after the investigation got under way.
The insider loans were made to the directors in 1984 to let them quietly buy stock in the Alaska National Bank of the North, a Fairbanks-based rival, in an unsuccessful takeover bid.
Smith faces a total of seven years in prison for the two crimes.
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