William Sandison, the former CEO of Community National Bank in Forest Lake, was sentenced Friday in U.S. District Court in Minneapolis to four months in prison for participating in a fraud scheme related to the failed Ramsey Town Center project.
The 67-year-old Forest Lake resident pleaded guilty to one count of conspiracy to defraud the United States. In addition to the term in federal prison, U.S. District Judge Patrick Schiltz ordered Sandison to pay a $30,000 fine.
In his plea agreement, Sandison admitted to a conspiracy to defraud other financial institutions as well as the Office of the Comptroller of the Currency.
Community National Bank, which opened in 1980 and had branches in Lino Lakes and Vadnais Heights, was closed in December by the Comptroller of the Currency and taken over by Farmers & Merchants Savings Bank of Manchester, Iowa. Out of 405 banks in Minnesota, it ranked 333rd by assets at the time of the takeover.
Sandison and his co-conspirators used Community National to solicit other banks to finance Ramsey Town Center, a 320-acre mixed-use development in Ramsey. They got 20 banks to back the project. Community National put $1.5 million into the project and loaned it $35 million in development funds, with an option for $15 million more. Sandison's bank handled the loan.
The Ramsey Town Center project was one of the biggest residential real estate debacles in recent Twin Cities history. During the boom, city officials had hoped the huge project would transform the rural Anoka County community north of Minneapolis into a bustling suburban destination with more than 2,000 housing units, shops, parkland and a transit station.
The city, which bought about half of the original project acreage out of foreclosure in 2009, has been working to revive parts of the development, re-branding it "The COR." Plans currently include a 230-unit luxury apartment complex.
Star Tribune staff writer Jennifer Bjorhus contributed to this report. Dan Browning • 612-673-4493