A federal grand jury has issued a 17-count indictment against Ozarks banker Richard T. Gregg for bank and wire fraud schemes totaling $3.3 million, as well as money laundering and bankruptcy fraud.
Gregg is charged with 10 counts of money laundering, four counts of bank fraud, two counts of wire fraud and one count of bankruptcy fraud. The class B, C and D felony charges could bring sentences of up to 65 years in prison and fines up to $1.75 million, along with mandatory restitution. He is charged with crimes impacting several local financial institutions and two Oklahoma casinos.
Two of the banks he was associated with may have shut down due to his actions, according to a representative of the Internal Revenue Service investigation team. Gregg was the principal shareholder and director of Southwest Community Bank in Springfield, which failed in 2010, and he and his wife also were majority shareholders of Glasgow Savings Bank in mid-Missouri before the Federal Deposit Insurance Corp. shut it down in mid-2012.
According to the indictment, as of Feb. 28, $14.6 million of the known debt attributable to Gregg and his business entities has been charged off by creditors and was not collectable. In a 2009 financial statement Gregg provided to Great Southern Bank, he is said to have reported more than $65 million in liabilities.
The chargesIn 2008, the indictment charges Gregg engaged in a scheme to defraud Southwest Community Bank by selling a piece of commercial real estate at 2814 S. Fremont Ave. at an inflated price of $1.55 million. He did not disclose that he had purchased the property a few months earlier for $775,000, according to the indictment. Additionally, Gregg allegedly failed to disclose to the bank that he received one appraisal valuing the property at $762,000 and he canceled a second appraisal when he didn’t agree with the preliminary findings. A third appraisal reportedly came in at $1.58 million before the bank made the purchase at his direction.
The indictment also alleges Gregg was engaged in schemes to use collectible automobiles as collateral to obtain loans and defraud Great Southern Bank, Metropolitan National Bank and Peoples Bank of the Ozarks. As part of the schemes, he sold seven cars to an auto auction in Scottsdale, Ariz., five of which were encumbered.
The indictment states Metropolitan National Bank lost $17,221 from a $400,000 loan issued to Gregg in 2005 and renewed in 2009. Gregg also borrowed $400,000 from Great Southern in 2007 and ultimately defaulted on the loan, netting a loss for the bank of $129,644.
Investigators claims Gregg signed trust receipts on the vehicles to secure the titles, signing a promise to return the title documents, or proceeds from sales to the banks.
Johnny Nunez, spokesman for the criminal investigators of the IRS said he understands the titles of collectable cars that have an encumbrance are typically not signed to protect the value of the car.
“The bank does not sign the backs of titles showing there is an encumbrance just because of the types of vehicles – one of the vehicles was a Ford GT that sold for $150,000,” Nunez said. “If I buy a vehicle from GMC and finance it through them, GMC usually stamps the back of the title and they hold it. But for these types of cars, if there is a lien holder on the title, that may lower the value of the vehicle.”
In February 2009, Gregg borrowed $2 million from Great Southern using 160,000 shares of stock for First Bancshares Inc., the holding company for First Homes Savings Bank, as collateral, according to the charges. With $1.5 million remaining on the loan, he withdrew the stock certificate, signing a trust receipt promising to return the stock within 30 days. Instead, Gregg is alleged to have deposited the stock into his Scottrade account, borrowed $440,000 from the Scottrade margin account with the stock as collateral, and never returned the stock to Great Southern.
Gregg also allegedly bounced checks at two Oklahoma casinos: Buffalo Run Casino & Hotel in Miami, Okla., and Downstream Casino Resort in Quapaw, Okla. In January 2012, he allegedly wrote five bad checks worth $10,000 each to Buffalo Run, and in March of last year, he is charged with writing five checks to Downstream totaling $60,000 that the bank account could not cover.
He also is charged with making false declarations in his August bankruptcy proceedings when he claimed 1717 Marketplace LLC owed him $868,000 for a personal loan and another person $801,000. According to the indictment, 1717 Marketplace was among some 30 corporations in which Gregg had an ownership interest.
The falloutNunez said he couldn’t comment on the length of the investigation but said a 17-count indictment is not uncommon. The impact of his actions, however, was rare.
“Seventeen counts may sound like a lot, but these are individual acts, and combined, kind of give a story,” Nunez said. “What’s rare is the amount of loss that is alleged to have occurred by those banks. Then, there are also two banks that failed directly or indirectly by his actions.”
Kelly Polonus, a spokeswoman for Great Southern, which lost at least $1.6 million through Gregg’s alleged fraud, said the bank declined to comment on the litigation or customer relations, citing internal policy. Michal Moss Early, Metropolitan National Bank business development and marketing officer, and Mark McFatridge, the bank’s president and CEO, did not respond to requests for an interview by press time.
Officials at both Oklahoma casinos also did not comment for the story.
According to online court documents, federal prosecutors did not request pretrial detention and the defendant was released on bond March 6. Gregg, reached by phone, declined an interview.
Online records show no hearings had been scheduled as of March 14.
