A 38-year-old loan officer defrauded his employer through loan manipulation and fictitious loans.
SHERMAN, Texas – A 38-year-old Sherman man has been sentenced to federal prison for bank fraud in the Eastern District of Texas, announced U.S. Attorney Joseph D. Brown.
Michael Shelley pleaded guilty on July 18, 2018, to bank fraud and was sentenced to 120 months in federal prison on Feb. 7, 2019, by U.S. District Judge Amos Mazzant. Shelley was also ordered to pay restitution in the amount of $2,189,073 to Lone Star Agricultural Credit Association (LSAC).
According to information presented in court, Shelley engaged in bank fraud while employed as a licensed loan officer at LSAC. Shelley devised and executed a scheme to defraud LSAC of millions of dollars through loan manipulation. Without LSAC’s knowledge or authorization, Shelley fabricated loan documents, advanced funds to fictitious borrowers, and manipulated collateral and loan interest rates. He made unauthorized fund transfers from fictitious borrowers to existing LSAC customers, all to the detriment of LSAC. Shelley’s criminal conduct involved nearly $9 million in LSAC loans and funds.
At sentencing, counsel for the victim, LSAC, explained the expansive financial harm Shelley’s fraud caused to both LSAC and its borrower-members. Due to Shelley’s position of authority within the bank, LSAC had to expend significant resources to unwind and uncover the full breadth and impact of his fraud. According to LSAC, the impact of Shelley’s fraud will be felt for years to come.
“Employee theft affects many businesses, and it can be devastating to a company,” said U.S. Attorney Joe Brown. “Unfortunately, this man had access to a whole lot of money, and he took advantage of that, and took advantage of the bank. It doesn’t matter whether it’s stolen with a gun or computer, it hurts just as bad to the victim.”
This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Christopher A. Eason, with the assistance of Assistant U.S. Attorney Robert Austin Wells.