FDIC fines former directors of Pinehurst Bank $7,500 each

The Federal Deposit Insurance Corp. has fined Pinehurst Bank's founder and former chairman and four ex-directors of the bank each $7,500.

The orders, released Friday, didn't specify the reason for the penalties.

In an interview Friday, Thomas Lohmann, Pinehurst's founder and former chairman, said the fines were not related to a check-kiting criminal trial involving the now-defunct Pinehurst Bank.

The fines were for the bank being late filing a financial report in 2009 "and had nothing to do with any other wrongdoing," Lohmann said in a statement.

"We had taken the advice of the bank's president regarding the reporting and only found out about the issue during the criminal prosecution of the then president of the bank," Lohmann said in the statement.

The group opted to accept the penalty rather than spend a much larger sum on legal expenses, he said.

Lohmann is head of Pinehurst Properties Inc. in Edina.

John Lohmann Jr., Tom Lohmann's brother, said he thought the fines were overkill.

"I don't understand why any person would sit on the board of a bank, particularly a small bank, if the board members are treated this way when problems with the bank develop," said Lohmann Jr., a retired banker in Edina.

State regulators shuttered Pinehurst Bank's sole branch in St. Paul's Highland Park in 2010 and the FDIC sold it to Coulee Bank of La Crosse, Wis. Coulee renamed it and moved the branch to Grand Avenue in St. Paul. Indictments followed in 2011.

In September, Pinehurst Bank's former president, John Markert, was sentenced to 3 1/2 years in prison for misapplying the bank's funds to cover up a customer's $1.85 million in anticipated overdrafts.

Markert was convicted on five counts of misapplying the bank's funds to cover a check-kiting scheme of customer George Wintz Jr., a scheme that involved getting five straw borrowers to take $1.9 million in loans from Pinehurst to cover for Wintz's bad checks. Wintz was also sentenced to 3 1/2 years in prison.