Grand jury indicts Mercantile Bank vice president

Posted online January 23, 1999 | 11:00 pm

An officer of Mercantile Bank of South Central Missouri has been indicted by a federal grand jury, charged in three counts in connection to a U.S. Small Business Administration-guaranteed loan the bank made to Lines Music Company.

A release from U.S. Attorney Steve Hill said Andrea J. McGehee was the subject of an indictment returned by the grand jury under seal Dec. 17. McGehee's initial court appearance was Jan. 12, according to Assistant U.S. Attorney Richard E. Monroe.

McGehee is an assistant vice president with the bank in Springfield, according to information from the U.S. Attorney for the Western District of Missouri. Freed on her own recognizance after the initial court appearance, McGehee is next scheduled to appear at an arraignment Jan. 28 in the courtroom of U.S. Magistrate James C. England.

The charges were making false statements to the SBA, making false entries in the records of a federally insured bank and presenting a false claim against the United States.

Each charge relates to a 1995 SBA-guaranteed loan of $155,000. Lines Music Company filed for bankruptcy protection from its creditors in June 1995.

The release from the U.S. Attorney's Office contained the following allegations, still to be proved in court:

?An SBA application for a business loan in January 1995 said that certain outstanding loans to Lines Music were current when they were delinquent.

?Mercantile records were entered in February 1995 stating that the SBA loan would be used to pay down outstanding debts from trade accounts "when in fact a substantial portion of the proceeds were to be used to bring certain delinquent loans owed to Mercantile current."

?In August 1995 a claim was presented to the SBA for full payment to Mercantile on its guarantee of the Lines loan, when the guarantee was unenforceable because it had been obtained by means of a false application.

The case was investigated by the Office of Inspector General for the SBA in cooperation with the FBI.

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