The former president of Pinehurst Bank in St. Paul was convicted Friday of misapplying the bank's funds to cover up $1.9 million in overdrafts by one of its regular customers, a Minneapolis businessman who also was convicted in the case of bank fraud and embezzlement.

But after deliberating for four days, jurors found a former senior loan officer of the bank, Gregory Paul Pederson, not guilty of all charges. Pederson, 44, of Roseville, heaved a sigh of relief as the last verdict was read. Tears welled in his eyes as he and his wife quickly left the courtroom.

"It's been an honor representing an innocent man," said his attorney, Christopher Madel.

Jurors split the verdict on his former boss, John Anthony Markert, 58, of Mendota Heights. Markert was found guilty of five counts of misapplying funds for his role in approving loans to cover a check-kiting scheme. He was acquitted of scheming to defraud the bank.

The jury also split the verdict on George L. Wintz Jr., 72, of Minneapolis. They found him guilty of two counts of bank fraud and one count of embezzlement for taking money from his employees' retirement plan. But they found him not guilty of helping Markert to misapply funds on his behalf.

Wintz had been planning to plead guilty in June to one count of aiding and abetting the misapplication of bank funds, but changed his mind and changed lawyers.

U.S. Attorney B. Todd Jones was in court to hear the verdicts read. "We respect the jury's decision in this case and will continue to vigorously prosecute those who engage in fraud and deception for their own personal enrichment at the public's expense," he said in a prepared statement.

Joe Friedberg, who represents Markert, said he was surprised and disappointed. "Clearly, Mr. Pederson deserved to be acquitted," he said. "But I don't understand how my client ended up convicted of the most counts."

Markert became president of Pinehurst Bank in June 2007, and Pederson became its chief credit officer and a senior vice president in July 2007. Both men were fired on Jan. 29, 2010. The bank was founded in 2004 and its only branch was in St. Paul's Highland Park.

Wintz owns or controls three Minneapolis trucking and warehouse companies.

Wintz wrote batches of checks between various business accounts at Pinehurst and Northstar Bank, inflating the account balances.

Some Wintz family members and employees were recruited to get $1.9 million in "nominee loans" from Pinehurst to provide cover for Wintz and for the bank. Had his Pinehurst overdrafts gone uncovered, it would have greatly exceeded the small bank's lending limits, prompting regulators to shut it down. Friedberg argued that his client actually saved the bank from an early demise.

Regulators closed the bank last year and sold it to La Crosse, Wis.-based Coulee Bank, which moved the branch to another St. Paul location.

Dan Browning • 612-673-4493