Starbuck Man Sentenced For Conspiring To Commit Bank Fraud And Money Laundering
MINNEAPOLIS – A 55-year-old man from the central Minnesota community of Starbuck
was sentenced earlier today in federal court in St. Paul for conspiring with others to steal more
than $1 million in loan proceeds from the First Bank of Kensington. United States District Court
Judge Richard H. Kyle sentenced William Felix Schluter to one year in federal prison on one
count of conspiracy to commit both bank fraud and money laundering. Schluter was charged on
September 24, 2010, and pleaded guilty on June 17, 2011.
In his plea agreement, Schluter admitted that from 2002 through 2006, he conspired with an
unnamed individual to obtain money fraudulently from the bank through the use of straw
borrowers. In accordance with laws and bank policies, restrictions exist on the loan amounts
allowed to any one borrower, and Schluter and the companies he owned had reached those
limits. To bypass them, however, Schluter arranged for straw borrowers to apply for loans and
then transfer the loan proceeds to business concerns owned by him. Many of the straw borrowers
were companies that had no ability to repay the loans. Schluter also commingled various funds,
including deposits and loan repayments, among his various ownership interests in an effort to
cover up the conspiracy. In furtherance of the scheme, Schluter and the unnamed individual
created and submitted to the bank false loan-purpose statements as well as falsified bank records.
Once the loan proceeds were secured, Schluter used them for his personal use.
Specifically, on September 28, 2005, Schluter submitted a false loan-purpose statement to
the bank in order to obtain a $174,431 loan in the name of a straw company called Baja
Development Corporation. Then, later that day, the loan proceeds were transferred to an entity
he owned; and, ultimately, the money was used for his own benefit and for the benefit of his
companies. The total estimated loss amount from this scheme was between $1 million and $2.5
This case was the result of an investigation by the Internal Revenue Service-Criminal
Investigation Division, the Federal Bureau of Investigation, and the Federal Deposit Insurance
Corporation. It was prosecuted by Assistant U.S. Attorney Nicole A. Engisch.