The former president and majority owner of First State Bank Minnesota in LeRoy, Minn., was sentenced Wednesday to 30 months in federal prison and ordered to pay $609,848 for misappropriating funds from the bank and its customers and for tax evasion.
Gerald Alan Payne, 54, pleaded guilty in October to one count of bank fraud and one count of tax evasion. Payne admitted to obtaining money from customer bank accounts, charging personal expenditures on the bank's credit cards and cashing checks written to the bank and others while keeping the cash for himself. Payne also admitted he defrauded individuals for whom he served as a trustee.
At Payne's sentencing hearing in U.S. District Court in Minneapolis, one of the daughters of an elderly victim warned Payne to "never go to her home again." A number of the victims' family members attended the hearing, as did some bank employees, including Payne's replacement as president.
LeRoy is a town of just under 1,000 people in southeast Minnesota, about 25 miles east of Albert Lea.
Judge Ann Montgomery said Payne's crimes had "ripped a small town asunder."
"This is a very clear demonstration why no crimes are victimless," she said before imposing the sentence. "It may seem like a money thing ... but a great many people were affected."
Payne will sell his stake in First State Bank Minnesota to pay restitution and the taxes he owes. The estimated value of Payne's bank shares is $1.8 million, according to Robert Sicoli, Payne's attorney. He owes the IRS $474,000.
