A negative balance of $3.4 million cost an Arizona bank millions of dollars, played a role in the collapse of a mortgage company and sent the company’s former top executive to prison.
Roger Duane Mason, 60, has been sentenced to 37 months in federal prison after pleading guilty to commit bank fraud. Mason, the former president and CEO of the defunct American Bantrust Mortgage Services Corp. in Phoenix was also ordered to pay $3.4 million in restitution for his role in what federal prosecutors described as a massive check-kiting scheme.
Mason, who lives in Iowa, was sentenced in a federal court in Phoenix. In addition to a prison term, he will also be required to serve three years on supervised probation after being released.
Also charged in the scheme was Sheila Johnson, 50, the former treasurer of American Bantrust Mortgage. She has pleaded guilty but has not been sentenced.
In a statement the U.S. Attorney’s office in Arizona said the charges against Mason and Johnson “were a result of an investigation following the collapse of American Bantrust … a mortgage processing and servicing company.”
The company went into receivership and was eventually taken over by Arizona state regulators.
“The collapse occurred when two financial institutions discovered a negative balance of $3,439,409.63 in the accounts of American Bantrust Mortgage … as a result of the check-kiting scheme,” prosecutors said.
The loss cost First National Bank of Arizona, which held the balances, more than $3.4 million.
Prosecutors said that Mason and Johnson worked in tandem to inflate the balances in 11 of the company’s bank accounts. With Mason’s knowledge Johnson wrote checks on accounts with insufficient funds; some of the checks were to cover earlier overdrafts.
That was done “in such a manner to conceal the fact the company had a negative balance,” prosecutors said.
During the same time Mason helped himself to $1.3 million in salary advances even though his company had negative bank balances as high as $1.7 million.
