Officers of collapsed bank convicted of fraud
Two former bank officers and an attorney were sentenced Friday for their roles in the 2010 collapse of Sonoma Valley Bank, which cost investors and taxpayers millions of dollars.
Sean Clark Cutting, former chief executive officer, and Brian Scott Melland, former chief loan officer, were sentenced for their December 2017 convictions for conspiracy, bank fraud, wire fraud, money laundering, falsifying bank records, lying to bank regulators and other crimes, according to Alex Tse, acting U.S. Attorney for the Northern District of California.
Cutting, 44, of Sonoma, and Melland, 45, of Santa Rosa, were each sentenced to eight years, four months in prison by U.S. District Judge Susan Illston.
Also sentenced was co-defendant David John Lonich, an attorney for Bijan Madjlessi, the Marin and Sonoma County real estate developer who had been indicted on charges of bank fraud and other offenses. Madjlessi was a fourth defendant in the case until he died May 6, 2014, when his car plunged into a steep ravine off Highway 1 in Marin County, near Muir Beach.
Lonich, 59, of Santa Rosa, was convicted for his role in the bank’s collapse, for conspiracy, bank fraud, wire fraud, and other offenses. He was sentenced to six years, eight months in prison, according to the U.S. Attorney’s Office.
The trio was convicted in December for crimes that led to the failure of the community bank, resulting in $47 million in losses, Tse said.
“Senior bank executives and the corrupt attorneys who help them must always be held accountable for threatening the safety and soundness of federally-insured banks, as today’s significant sentences reaffirm,” Tse said Friday in a news release.
Much of the evidence during the eight-week trial last year related to Madjlessi’s real estate projects at the Park Lane Villas in Santa Rosa and Petaluma Greenbriar Apartments in Petaluma.
Evidence at trial showed that between 2004 and 2010, Sonoma Valley Bank loaned Madjlessi, and persons and entities he controlled, in excess of $35 million – about $24.7 million more than the legal lending limit set by the bank’s regulators, according to Tse.
To conceal the loans, Cutting and Melland recommended a set of loans for $3.65 million to a “straw” borrower controlled by Madjlessi, who received the bribe the next day, Tse said.