By Tim Ruzek
truzek@postbulletin.com
LeROY — Gerald Payne, a former LeRoy bank president, has pleaded guilty in federal court to bank fraud and tax evasion. Payne was accused of misusing more than $200,000 while at the bank.
Payne, 53, of LeRoy, pleaded guilty Thursday in U.S. District Court in Minneapolis, according to court records.
Payne resigned June 29, 2007, after 35 years with First State Bank Minnesota in LeRoy. His resignation came as investigators began looking into allegations about Payne.
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A judge ordered a presentence investigation for Payne but didn’t schedule a sentencing date.
According to the charging documents, Payne was president and chief executive officer of First State Bank from 1989 to 2007. Payne defrauded the bank from about January 2003 through June 2007, court documents say.
Payne took money from customer bank accounts, charged personal expenses on First State’s credit cards and retained proceeds from cashed checks written to the bank and other parties, according to the charges.
About June 2007, Payne took about $6,330 from a customer’s account at First State Bank, documents say.
About April 15, 2008, Payne allegedly prepared and filed a fraudulent income tax form to avoid taxes. Payne allegedly stated his 2007 taxable income was $79,656 while knowing his actual taxable income for that year was "well in excess" of $240,053, prosecutors alleged.
In December, Mower County prosecutors dismissed felony criminal cases against Payne because federal prosecutors expected to charge him. Those criminal complaints accused Payne of illegally taking or misusing $282,939 in funds from Jan. 1, 2004, to June 13, 2007.
A complaint alleged Payne stole or misused $189,610 from the bank, including cash and unauthorized check deposits, unauthorized credit-card transactions and $9,322 in cell phone costs for his family.
The other complaints alleged Payne swindled about $89,937 from a person’s accounts at the bank and took about $3,392 in cashed checks from the LeRoy Commercial Club.
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Payne also allegedly set up wages or salaries for non-bank employees, including two of his children.
A version of this story appears in the Austin Post-Bulletin.
