A former bank CEO has been sentenced to prison by a court in the US state of Minnesota for falsifying bank records.

The court found that Robert Hager misappropriated more than US$1.6 million by issuing unauthorised standby letters of credit (L/Cs) and sentenced him to 18 months in prison for making a false entry in bank records.

Executive positions

The former CEO of Border State Bank also held various executive positions in banks that Border acquired, including the former First Advantage Bank.

In late 2015 and early 2016, Hager loaned money to a bank customer to invest in a diamond and gold venture in Liberia, Ghana, and Kenya that promised a quick return.

Personal investment

After he depleted his own personal funds on the investment and maxed out the amount he could borrow from the bank, the former banker asked other individuals, including bank customers, shareholders, and directors of the bank to lend him money, which would enable him to recover his personal funds.

Between 2016 and 2017, the former CEO requested a series of loans by having Border customers take out loans in their own names, or draw from loans they already had, and then transfer the funds to him.

Unauthorised L/Cs

In May 2016, Hager issued three unauthorised standby L/Cs worth US$1.6 million to facilitate the purchase and delivery of diamonds and gold from Africa.

In each instance, Hager issued the L/C on the letterhead of First Advantage Bank and signed the letter as CEO of First Advantage.

Failed obligations

Hager failed however in his obligations to enter the L/Cs into the bank's general ledger so that they could be accounted for and tracked by regulators.

In order to conceal his actions, Hager failed to report the L/Cs to bank personnel so that they could be logged into the bank's system.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.