Two local banks accused of complicity in fraud case
Two local banks are being accused in federal bankruptcy court of allowing a check-kiting scheme by Ken Hatzenbeller as part of the Shoot the Moon fraud case.
Check kiting is a form of check fraud, essentially floating checks to make use of nonexistent funds.
Shoot the Moon was one of 19 separate entities created between 2006 to 2015 for the purpose of acquiring and operating restaurants in Montana, Washington, and Idaho. The restaurants included Chili’s Bar & Grills, On the Borders and Sonic Drive-Ins, as well as several independent restaurants, according to the complaint in federal bankruptcy court.
Hatzenbeller was sentenced to 30 months in federal prison for bank fraud in 2017 and ordered to pay $1 million in restitution.
According to the civil complaint filed in August in federal court, “Hatzenbeller drafted checks of significant value from one account with one financial institution and then promptly drafted a check from another account from another financial institution to be deposited in the first account to cover the initial withdrawal. Hatzenbeller repeated this practice over and over utilizing its accounts with [First Interstate Bank] and [Prairie Mountain Bank], without ever having actual funds to cover the checks being written. In effect, the scheme provided Shoot the Moon with substantial interest-free loans.”
According the complaint, Shoot the Moon’s bankruptcy trustee argues that executives at both First Interstate Bank and Prairie Mountain Bank knew and allowed the fraud to continue for several years around 2010-2014.
The complaint quotes emails from Bill Weber and Ted Lewis, executives at First Interstate Bank, and Laura Vukasin at Prairie Mountain Bank, claiming that they were complicit in the fraud.
Ted Lewis currently serves on the executive committee for the Great Falls Development Authority.
In 2019, Prairie Mountain Bank was acquired by American Bank Center, which now goes by Bravera Bank. Vukasin remained the president of the local bank.
In August 2021, the complaint alleging check-kiting scheme was filed naming Prairie Mountain Bank. On Aug. 30, 2021, the complaint was amended to name American Bank Center. Multiple sources told The Electric that Vukasin was escorted from the bank in mid-September.
Ryan Beck, an executive with Bavera Bank, confirmed to The Electric this week that Vukasin is not employed with the company but could not comment on the pending litigation.
Vukasin previously served on the Great Falls Public Schools board of trustees until 2019 and was appointed to the City of Great Falls planning board.
In early 2021, city officials were made aware that Vukasin had moved out of the city limits, making her ineligible to serve on the board, and had not notified city staff. Vukasin resigned.
Vukasin is currently serving as treasurer for Judge David Grubich’s campaign for district court judge, according to paperwork filed with the Montana Commissioner of Political Practices.
In October, attorneys for First Interstate Bank filed a motion to dismiss the case alleging fraud since the court had approved a 2016 settlement agreement releasing the bank from all claims by the trustee, to include the alleged fraud.
Attorneys for American Bank Center asked the court to remove Prairie Mountain Bank from the base as it no longer exists as a legal entity and also moved to dismiss the case against American Bank Center, arguing that the settlement agreement released them from all claims and that the bank did not have a duty to disclose the fraud. Attorneys for American Bank Center argue that the trustee also have the information available related to the check-kiting scheme and only recently noticed. They also argue that disclosing any alleged fraud to the trustee would run contrary to federal law in which banking institutions are required to report suspicious activity to federal agencies and cannot disclose it otherwise.
The bankruptcy trustee argues that because the banks participated in the fraud, they should not be able to seek claims against Shoot the Moon in the bankruptcy case.
First Interstate claims in the underlying bankruptcy case exceed $13.2 million and the claims from Prairie Mountain Bank exceed $1.3 million, according to court documents.
As of Nov. 18, no criminal cases related to the alleged check-kiting scheme have been filed in district or federal court.
A hearing on the issues related the alleged check-kiting scheme has not yet been scheduled.