The federal government's squeeze on two former officers of a failed St. Paul bank and one of its borrowers ratcheted tighter this week when a federal grand jury handed up a new indictment more than doubling the number of charges in an alleged check-kiting scheme.
John A. Markert, 57, of Mendota Heights; Gregory P. Pederson, 43, of Roseville; and George L. Wintz Jr., 71, of Minneapolis, were each charged in June with five counts of misapplication of bank funds.
A new indictment handed up Wednesday now charges Wintz with one count of bank fraud related to an alleged $1.9 million check-kiting scheme. And it charges Wintz, Markert and Pederson with one count of fraud related to an alleged loan scheme.
In addition, the three men each face five counts of misapplication of bank funds, commonly known as embezzlement. And Markert and Pederson each face three counts of making false statements to unemployment law judges operating under the purview of the U.S. Department of Labor. Finally, Wintz also faces a charge that he embezzled money from an employee benefit plan associated with his firm, Triangle Warehouse Inc.
"They had nothing with the first indictment, and the second indictment is much worse," said Chris Madel, Pederson's attorney. "They wouldn't need to do a second indictment if they had a case in the first place."
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: McCallum Transfer Inc., Triangle Warehouse Inc. and Cue Properties LLC. According to the indictment, Wintz and his companies were longtime banking customers of Markert's even before he joined Pinehurst.
The indictment describes Wintz as the young bank's "newest and largest customer," and says that he wrote batches of checks between various business accounts at Pinehurst and another unidentified bank, falsely inflating the account balances.
A Pinehurst Bank employee told Markert in 2008 about overdrafts in the accounts, but he approved them, the indictment says. Eventually, the other bank noticed a problem and returned more than $1.8 million in checks that Wintz had written on the accounts there to one of his companies with an account at Pinehurst.
Markert and Pederson allegedly recruited five straw borrowers -- including Wintz's girlfriend and his daughter -- to get $1.9 million in loans from Pinehurst for Wintz, concealing the loans from the bank's board and regulators. An independent audit of the bank last year uncovered the suspect loans.
Pinehurst took a $2.2 million charge from the alleged scheme, contributing to the bank's 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.
Wintz changes lawyers
Doug Kelley, Wintz's former lawyer, said in June that Wintz expected to plead guilty to one count of aiding and abetting the misapplication of bank funds. Kelley said that Wintz had either repaid the overdrafts and loans or secured them with new collateral.
But Wintz's change of plea hearing, scheduled for Aug. 8, was canceled and several weeks later he replaced Kelley with Andrew Luger of the Greene Espel law firm.
"George Wintz will plead not guilty to the new indictment," Luger said Thursday. "We look forward to presenting a vigorous defense that will answer these charges in court this January."
Markert's attorney, Joe Friedberg, could not be reached immediately for comment.
Dan Browning • 612-673-4493