A former Minnesota bank CEO was sentenced to 18 months in prison Tuesday for falsifying records and misappropriating more than $1.6 million.
Robert Hager of Greenbush pleaded guilty in May to one count of making false entries in bank records.
Hager was CEO of Border State Bank, which has locations throughout Northern Minnesota. Hager also served as director of the bank’s holding company, Border Bancshares. Hager held positions at banks Border Bancshares acquired, including the former First State Bank of Clearbrook and the former First Advantage Bank.
Hager loaned money to a bank customer to invest in a diamond and gold venture in Liberia, Ghana and Kenya in late 2015 and early 2016. Hager depleted his own funds in the investments and maxed out the amount he could borrow from the bank. He then asked bank customers, shareholders and directors of the bank to lend him money.
According to Hager’s guilty plea, Hager had bank customers take out loans in their own name or draw from existing loans and then transfer the money to him between 2016 and 2017.
In May 2016, Hager used three unauthorized Standby Letters of Credit worth $1.6 million to have diamonds and gold delivered from Africa. Hager used First Advantage Bank letterhead for the Standby Letters of Credit and signed the letters as CEO.
Standby Letters of Credit are considered obligations of payment by the bank and need to be tracked by regulators, but Hager failed to report them to bank personnel.
Hager was sentenced to 18 months in prison and two years of supervised release.