Bloomington Accountant Sentenced For Bank Fraud
MINNEAPOLIS—Earlier today in federal court, the former senior vice president and chief
financial officer for Centennial Mortgage and Funding, Inc. (“Centennial”), was sentenced for
defrauding a bank of approximately $8 million through material omissions and
misrepresentations regarding Centennial’s operations and mortgage loans. United States
District Court Judge David S. Doty sentenced Joseph W. Traxler, age 64, of Bloomington,
sentenced Traxler to 60 months in prison on one count of aiding and abetting bank fraud. In
addition, he was ordered to pay $5,395,923 in restitution. Traxler was charged on September
28, 2011, and pleaded guilty on October 27, 2011.
In his plea agreement, Traxler, an accountant, admitted that from 2007 through 2008, he
fraudulently aided and abetted Centennial’s use of funds intended for mortgage loans to cover
Centennial’s operating losses and to fund the company’s payroll and other expenses.
Specifically, when a home buyer applied to Centennial for a mortgage loan, Centennial
requested an advance from one of the lines of credit it held with two different banks. Once the
advance was approved, and funds were deposited into an account that Centennial used to fund
mortgage loans, Traxler knew that Centennial, instead, used the money to cover company
operating losses. In addition, Traxler admitted kiting checks between the two banks accounts to
artificially inflate their balances in order to allow Centennial to continue operating. Check
kiting, which is illegal, occurs when someone intentionally writes a check for a value greater
than the account balance, and then writes another check from a different account with nonsufficient
funds to cover the over-drawn account.
Specifically, Centennial, through Traxler and others acting at his direction or in concert
with him—(1) made misrepresentations to lenders about the status of existing mortgage loans to
induce them to advance additional funds; (2) concealed from lenders existing mortgage loan
defaults; (3) refrained from disclosing that the company had secured double funding for 23
mortgage loans; and, (4) wrote checks between Centennial’s accounts at different banks in an
effort to inflate account balances and thereby allow checks to clear that would have otherwise
bounced. Traxler also admitted that others committed these acts, and he did nothing to stop it.
This case was the result of an investigation by the Federal Bureau of Investigation. It was
prosecuted by Assistant U.S. Attorneys Tracy L. Perzel and Kimberly A. Svendsen.