Former bank officer to spend year in prison

June 12, 2009
MISSOURI LAWYERS MEDIA
By Donna Walter

Former bank officer to spend year in prison

Former president of First Bank Mortgage Mark Turkcan was sentenced to one year and one day in prison for the misapplication of $35 million. A federal judge also ordered him to pay restitution of nearly $25 million.

 Turkcan, 54, pleaded guilty in January to one felony count of misrepresentation of bank money by a bank officer. Senior U.S. District Judge Donald J. Stohr, of the Eastern District of Missouri, sentenced Turkcan on Thursday.

 The guideline range that applied to Turkcan was 63 to 78 months, said his lawyer, Bill Margulis, of Margulis Grant & Margulis.

 “Our position was the actual loss suffered by First Bank was a lot less than the government claimed that it was,” he said. Turkcan’s lack of criminal history, his standing in the community, his cooperation with the government and the support he received from the people who wrote letters on his behalf all weighed in favor of the downward departure, Margulis said.
Jan Diltz, a spokeswoman for the U.S. Attorney’s Office in St. Louis, said it has not yet decided whether to appeal the downward departure.

 On the question of restitution, Margulis said, “I think he was ordered to pay $50,000 in the first month [and make] monthly payments after that.

 “Will he ever repay $24 million? I doubt it, but he’ll keep making payments on it. He’ll comply with the orders of the court,” the lawyer said.

 Stohr gave Turkcan a voluntary surrender, and Margulis said he expects his client to begin serving his sentence in about five weeks.

 Within that same time frame, Margulis said, the civil lawsuit filed against Turkcan by the U.S. Securities and Exchange Commission should be resolved. The SEC sued Turkcan the week after the former bank officer pleaded guilty.
The SEC alleged Turkcan defrauded investors by scheming to misstate the net income of First Bank Mortgage and its parent company, First Banks Inc. An SEC lawyer declined to comment on the civil lawsuit.
First Bank Mortgage discovered in May 2008 that it owed Bear Stearns about $35 million under outstanding repurchase agreements that Turkcan engaged in. That was a month after the company fired Turkcan. Margulis said in February that his client was fired because the mortgage division wasn’t performing well due to the downturn in the economy.

 According to the federal indictment and the SEC, the fraud dates back to 1987 when Turkcan was selling and trading mortgage-backed securities for Sheahan Financial. He allegedly concealed a $5 million loss by entering into an unauthorized repurchase transaction.
In 1990, First Banks bought Sheahan Financial’s parent company, Clayton Savings, without knowledge of the fraud. Turkcan became president of First Bank Mortgage, the former Sheahan Financial, and his “fraudulent conduct escalated,” the SEC alleged.

 Turkcan says he didn’t begin misappropriating funds until after First Banks Inc. bought Clayton Savings. He also says his actions didn’t cause First Bank to lose any money.

 The criminal case is U.S. v. Turkcan, 4:08-cr-428. The SEC case is U.S. Securities and Exchange Commission v. Turkcan, 4:09-cv-204.