Article

Note: Mark Ranum (Defendant), the senior loan officer of State Financial Bank of Wisconsin, approved the issuance of a Standby LC on behalf of Great Lakes Cruises (Applicant), in the amount of US$190,000 in favor of Attica (Beneficiary), a Greek shipping company to ensure that obligations under a cruise ship lease agreement were met. Defendant subsequently twice increased the amount of the LC by US$190,000, making Issuer's obligation US$570,000.

Defendant did not report having issued the LC to Issuer's credit committee or obtain approval as he was required to do for obligations exceeding US$300,000. Defendant also subsequently extended a loan on behalf of Issuer to Applicant for US$100,000 to cover a cash payment owed to Beneficiary without authority. Later, Defendant issued another unreported and unapproved LC in the amount of US$340,000, which was later increased to US$580,000 to enable Applicant to take possession of the cruise ship and move it from Greece to the Great Lakes, Defendant falsely reported that this loan was "cash collateralized" and risk free. Finally, Defendant loaned Applicant US$154,000 to make necessary modifications on the ship, and once again failed to report or seek approval for the loan. Although Applicant had showed initial promise with more than US$3,000,000 in bookings, Applicant experienced cash flow problems. Although Applicant did repay an initial loan, the vessel was declared unfit to sail. As a result, there was a default on the loan.

Defendant was charged in a three count criminal indictment with misapplication of bank funds by a bank officer pertaining to the US$580,000 loan, making a false statement in connection with a loan application, and with misapplication of bank funds. At trial, Defendant admitted exceeding his loan authority and misleading his employer, but denied that he intended to harm or defraud Issuer. Defendant was convicted on all three counts. The U.S. District Court for Eastern District Wisconsin, Adelman, J., imposed a sentence of twelve months and one day, followed by five years of supervised release.

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