A Clayton real estate developer has plead guilty to assisting in an unlawful insider loan scheme at the now defunct Excel Bank.
Michael Litz, 63, of Ladue, appeared before United States District Judge Audrey G. Fleissig to enter his plea of guilty Tuesday. Sentencing is scheduled for April 25.
Litz is the third person to plead guilty in a criminal investigation of Excel Bank, which failed in 2012. Former Excel loan officer Tim Murphy pleaded guilty last week to one count of bank fraud and will be sentenced April 24.
Shaun Hayes, who was once the executive of the bank, plead guilty to a count of bank fraud and one count of misapplication of funds, both felonies. He is scheduled for sentencing on April 13.
Litz was a principal in Bellington Realty and Eighteen Investments, which managed some 1,000 commercial and rental properties in Missouri.
According to the U.S. Attorney’s Office for the Eastern District of Missouri, Litz admitted to recruiting a straw party to sign on to a $3 million loan at Excel Bank to assist Litz’s businesses, while assuring the party he would not be held liable. Proceeds from the loan were used to pay off Litz’ and Hayes’ debts, records indicated.
Litz and Hayes set up other straw party loans at Excel Bank to cover millions of dollars in other delinquent loans tied to Eighteen Investments, according to court documents. Eighteen Investments was delinquent in more than $100 million in loans at banks throughout the area in 2009, according to the U.S. Attorney’s Office.
“Michael Litz used his connections to banker Shaun Hayes to commit fraud. The two men worked together to enrich themselves at the expense of Excel Bank,” Special Agent in Charge Richard Quinn of the FBI St. Louis Division said in a statement. “This type of self-dealing and fraud violates the integrity of our banking system and undermines consumer confidence.”
Bank regulators closed Excel Bank in October, 2012, and Simmons Bank succeeded it.
The case against the three men has been investigated by the Federal Bureau of Investigation, the Federal Finance Agency Office of Inspector General, the Federal Deposit Insurance Corporation Office of Inspector General and the Office of the Special Inspector General for the Troubled Asset Relief Program.
Criminal Chief James E. Crowe, Jr. and Assistant United States Attorney Gilbert Sison are handling the case for the U.S. Attorney’s Office.