Jennerstown Man Sentenced to 8 Years in Prison for Bank Fraud and Money Laundering Scheme
JOHNSTOWN, Pa. - A resident of Jennerstown, Pa., has been sentenced in federal court to 96 months in prison, three years supervised release, and ordered to pay restitution in the amount of $1,269,190, on his conviction of violating federal fraud laws United States Attorney David J. Hickton announced today.
United States District Judge Kim R. Gibson imposed the sentence on Holger P. Scheid, 48.
According to information presented to the court, on June 20, 2005, Scheid prepared or caused to be prepared a fraudulent loan application for the conversion of a property in Johnstown, Pa., into a long-term care facility. This fraudulent loan application was provided to Vartan National Bank, in Harrisburg, Pa., with the sole signature of Scheid on the loan documents representing that he was the President of Crown Phynex, LLC, the entity that owned the property, and guarantor for the loan.
Likewise, on July 1, 2005, Scheid prepared or caused to be prepared another fraudulent loan application for the conversion of another property into luxury condominiums for Vartan National Bank, with only his signature on it. These requested loans from Vartan National Bank were secured by certificates of deposit Scheid fraudulently obtained from the United Methodist Stewardship Foundation of Central Pennsylvania, Mechanicsburg, Pa.
As a result of receiving the two loan applications, and not knowing of the fraudulent nature of such applications, Vartan Bank disbursed $400,000 on June 22, 2005 and $1,500,000 on July 1, 2005, into Scheid’s Crown Phynex operating account at First Commonwealth Bank. In an effort to conceal his fraudulent receipt of the loan money, on July 6, 2005, Scheid paid off the first $400,000 loan with part of the money he received from the second loan. Resultingly, Vartan National Bank suffered a loss of $1,500,000, which Mr. Scheid used to pay personal credit cards, repay other investors, fund operating expenses for Crown Phynex, and to enrich himself personally.
In addition to his bank fraud scheme, Scheid also engaged in money laundering. On June 27, 2005, he laundered money in excess of $10,000 from the bank fraud offense when he caused $100,000 to be transferred out of his Crown Phynex operating account at First Commonwealth Bank into an account at Franklin Johnstown Federal Credit Union, and thereafter caused a Cashier’s Check for $100,000 to be drawn on the account at Franklin Johnstown Federal Credit Union, payable to the Criminal Division of the Court of Common Pleas of Northampton Co., Pa., as a restitution payment owed by him to the Commonwealth of Pennsylvania.
Assistant United States Attorney Stephanie L. Haines prosecuted this case on behalf of the government.
Mr. Hickton commended the Internal Revenue Service - Criminal Investigation for the investigation leading to the successful prosecution of Scheid.