Dive Brief:
- The former finance chief of a Nebraska bank was sentenced to 36 months in federal prison last week after being convicted on counts of bank fraud related to a $4.3 million scheme connected with loans sought to build a car wash, the Justice Department said Friday in a press release.
- Aaron Luneke, previously the CFO for Bank of the Valley, was convicted in March on one count of bank fraud and one count of attempted bank fraud.
- A jury found Luneke had defrauded both Bank of the Valley and Stearns Bank of St. Cloud, Minnesota, by submitting fraudulent and inflated invoices to obtain loans needed to build and operate a Legacy Express Car Wash in Columbus Nebraska, according to a DOJ press release. Luneke abused his position as finance chief to both perpetuate and to cover up the fraud, U.S. District Judge Brian Buescher found during the sentencing hearing.
Dive Insight:
At sentencing, Buescher found Luneke’s former role as CFO “significantly facilitated the commission and concealment of the fraud against the victim bank.”
Luneke will serve a five-year period of supervisory release after his prison term, the DOJ said. The judge also ordered Luneke to pay a $10,000 fine.
Bellwood, Nebraska-based Bank of the Valley has seven locations across the state and offers community, business and agricultural banking services. Luneke served as its CFO between 2018 and 2022.
Luneke also owned Living Waters RE, a limited liability company registered in Nebraska for the purpose of building a car wash set to operate in Columbus, according to the indictment.
Beginning around February 2021, Luneke used both fraudulent and inflated contract invoices to obtain loans related to the construction of the car wash, defrauding or attempting to defraud the two banks, according to a March release from the DOJ.
The bank fraud count included part of a scheme in which Luneke abused his authority as CFO to submit fraudulent invoices to Bank of the Valley to obtain additional construction loan funds for the car wash, ultimately receiving two loans totaling about $4.3 million.
Meanwhile, the jury also found Luneke attempted to defraud Stearns Bank, tapping fraudulent invoices in a bid to artificially inflate the value of the car wash property with the aim of receiving a $3.5 million refinancing loan, the DOJ said in its Friday release.
The ex-CFO also relied on a series of shell companies to help obfuscate the fraud, and failed to disclose “significant personal debts owed to family members” connected with his Stearns loan application, according to the press release.
The DOJ declined to comment beyond its Friday press release. Attorneys for Luneke and Bank of the Valley did not immediately respond to requests for comment.