Malta Ranchers Accused Of Million Dollar Belt Valley Bank Fraud in U.S. Federal Cour
In a twenty-three count indictment unsealed this week, Malta area ranchers Steven Lloyd Knudsen and Lori Webb Knudsen have been accused of defrauding the Belt Valley Bank in their 2005 application for an $813,000 loan in June of 2005 and in a May 2008 application for a $765,500 loan. The first 18 counts of the indictment relate to a scheme to defraud the bank and the remaining counts relate to accusations of bankruptcy fraud after the couple declared bankruptcy in June 2011.
During a federal court hearing in Great Falls on February 15, 2012, before U.S. District Judge Sam E. Haddon, Lori Webb Knudsen, 48, was arraigned and pled guilty to conspiracy to commit bank fraud and bank fraud. Her sentencing is set for June 21, 2012. She is currently released on special conditions.
Assistant U.S. Attorney Carl E. Rostad told the Court that if the government had taken the case against Lori Knudsen to trial, it would have presented evidence that the Knudsens had a banking relationship with Belt Valley Bank going back several years before the 2005 loan. Rostad told the Court that when applying for the 2005 loan, and in financial statements submitted in subsequent years to secure annual operating credit, the Knudsens had understated their liabilities and overstated their assets to secure financing. According to the indictment, the 2005 loan was guaranteed by the United States Department of Agriculture. Rostad advised the Court that the government would be seeking approximately $987,000 in restitution - half that amount being a loss to the Belt Valley Bank and the other half being owed to the Farm Service Agency.
The indictment lists hundreds of thousands of dollars worth of liabilities the Knudsens omitted from their financial statements. Rostad told the Court that the bank relied on the truthfulness of the financial statements to make its judgments as to whether the Knudsen ranching operation was viable and could service the debt created by the loans.
Lori Knudsen's plea agreement provides that in exchange for her plea to the charges of conspiracy and bank fraud in the first two counts of the indictment, the remaining charges of bank fraud, federal loan fraud, conversion of secured assets, conspiracy to commit bankruptcy fraud, and bankruptcy fraud will be dismissed. The government also agreed to dismiss the charges against Knudsen in an unrelated indictment that charged her with defrauding the government of relocation reimbursement monies she received as a County Executive Director for the FSA in Lewistown. That case was scheduled for trial next Tuesday in federal court. The trial was vacated and continued based upon the agreement reached in the bank and bankruptcy fraud case.
On the two counts to which she pleaded guilty, Lori Knudsen faces possible penalties of 35 years in prison, a $1,250,000 fine and 8 years supervised release.
Steven Lloyd Knudsen has not yet appeared or entered a plea to the charges contained in the indictment. Fourteen of the counts against him relating to the alleged defrauding of the Belt Valley Bank carry possible penalties of 30 years imprisonment, a $1,000,000 fine, and five years of supervised release. If imposed consecutively, the maximum penalty would be 420 years in prison, $14,000,000 in fines, and 70 years of supervised release. The remaining nine counts of the indictment which allege conspiracy, conversion of secured assets, federal loan guarantee fraud, and bankruptcy fraud, are each punishable by a maximum of five years in prison, a $250,000 fine, and three years of supervised release. If convicted of those charges, and if they were imposed consecutively, the maximum penalties would be 45 years of incarceration, $2,250,000 in fines, and 27 years of supervised release. An indictment is only a charging document and a named defendant is innocent until the charges are proved against him.
The investigation was conducted by the U.S. Department of Agriculture - Office of Inspector General.