Clayton real estate developer given 36 month prison sentence -

Clayton real estate developer given 36 month prison sentence

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(Credit: KMOV) (Credit: KMOV)

Michael Litz, 63, of Ladue was sentenced today to 36 months in federal prison. Litz pled guilty to his role in a bank fraud scheme involving insider loans at Excel Bank.

United States District Judge Audrey G. Fleissig delivered the sentence and ordered Litz to pay restitution in the amount of $5,048,003.67.

Litz was charged in April, 2016 along with Shaun Hayes for bank fraud and related charges involving a series of insider loans and straw party loans at Excel Bank. Hayes pled guilty in January and is scheduled to be sentenced May 23.

Hayes was the controlling shareholder in Excel Bank which had main offices in Sedalia, Missouri and a loan production office in Clayton. Litz was a principal in Bellington Realty and Eighteen Investments which managed over 1,000 residential and commercial rental properties in the area. It also bought and sold hundreds of residential properties each year.

Eighteen Investments was delinquent on over $100,000,000 in loans at banks throughout the area in 2009.

Litz and Hayes were also partners in a number of real estate development projects. One of these projects was McKnight Man I which involved the development of the property at the intersection of Manchester and McKnight Roads in Rock Hill. Litz and Hayes were guarantors on a McKnight Man loan at Centrue Bank in the amount of $900,000. The loan was delinquent in July, 2009. At the same time, Eighteen Investments was delinquent on $3,600,000 in loans at Centrue Bank.

Litz admitted that he recruited a close friend to sign on to a $3,300,000 loan at Excel Bank to assist Litz in his business. The friend was told he would not be held liable on the note and the loan would be taken care of. The individual was acting as a friend to help Litz, according to court documents.

The loan proceeds were used to pay off Litz’s and Hayes’s McKnight Man debt at Centrue Bank as well as the Eighteen Investments debt at that bank. Since Hayes was a principal at Excel Bank, the use of the loan funds to pay off the Hayes-Litz liability at Centrue Bank constituted unlawful self-dealing. Litz admitted that he participated in the transaction and directly benefited from it.

Litz and Hayes set up other straw party loans at Excel Bank to cover millions of dollars in other delinquent loans of Eighteen Investments, according to court documents. The restitution amount ordered by the court consisted largely of losses incurred by Excel Bank on the loans with most of the restitution being owed to Federal Deposit Insurance Corporation.

This case has been investigated by the Federal Bureau of Investigation, the Federal Finance Agency Office of Inspector General, the Federal Deposit Insurance Corporation Office of Inspector General and the Office of the Special Inspector General for the Troubled Asset Relief Program. Criminal Chief James Crowe, Jr. and Assistant United States Attorney Gilbert Sison are handling the case for the U.S. Attorney’s Office.

Copyright 2018 KMOV (Meredith Corporation). All rights reserved

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