Former Owner of Montana Area Chili's Sentenced to 30 Months in Prison for Bank Fraud
GREAT FALLS – Kenneth James Hatzenbeller, 65, of Great Falls, Montana, former owner of several Montana restaurants, was sentenced today to 30 months in prison and 3 years supervised release for bank fraud. He was also ordered to pay $1,077,866.82 to two banks. U.S. District Court Judge Brian M. Morris presided over the sentencing.
In court documents, federal prosecutor Chad Spraker wrote that on August of 2014, Hatzenbeller contacted Zions Bank and requested a $500,000 loan to purchase furniture, fixtures, and equipment for five Chili's restaurants operated by Shoot the Moon. The collateral for the loan was to be the furniture, fixtures, and equipment purchased with the loan proceeds.
On September 2, 2014, Hatzenbeller signed a Disbursement Request and Authorization requesting that $500,000.00 in loan proceeds be disbursed to Penner Brokerage. That same day, Zions Bank initiated a wire transfer of $494,890 to Wells Fargo for the benefit of Penner Brokerage based on invoices listing Penner Brokerage as the vendor for various furniture, fixtures, and equipment. The account controlled by Hatzenbeller’s daughter who knew nothing of Penner Brokerage or the invoices until interviewed by the FBI. The funds were never used for furniture, fixtures and equipment and were redirected to other company debts leaving Zions uncollateralized and unsecured.
In early September 2015, Hatzenbeller contacted Yellowstone Bank in Billings and indicated that Shoot the Moon was planning to open a Chili’s restaurant at the Rimrock Mall in Billings. Hatzenbeller was looking for financing for the project and stated he needed a $600,000 loan in order to purchase equipment and furnishings for the new restaurant. Hatzenbeller advised he and his partners would also be contributing an unspecified amount of capital to the project, and they would be personal guarantors on the loan. The bank was to have a lien on all fees, fixtures, and equipment as collateral
Due to Hatzenbeller and his partners’ strong financial statements, Yellowstone Bank did not require invoices from Shoot the Moon prior to making loan disbursements. Nevertheless, a bank vice president asked for invoices to make himself feel comfortable that the loan money was being spent as agreed upon. Hatzenbeller provided invoices that were either fabricated or for expenses that Shoot the Moon never incurred.
Shoot the Moon filed for a Chapter 11 bankruptcy in October of 2015. Hatzenbeller was deposed in the bankruptcy proceeding and admitted he used the Yellowstone Bank loan proceeds to pay expenses unrelated to the Billings Chili's restaurant. Hatzenbeller said he used the money to pay a food vendor, pay taxes, and meet payroll. When questioned about the September 2, 2014, $490,000 deposit from Zions Bank, Hatzenbeller falsely claimed it was a loan from his daughter and her husband.
This case was prosecuted by Assistant U.S. Attorney Chad C. Spraker and investigated by Federal Bureau of Investigation and the United States Trustee.