1 convicted, 1 pleads guilty to bank fraud: Milledgeville man, 
Lanark man took $460K a decade ago

ROCKFORD – A 56-year-old Milledgeville man was convicted Friday in federal court for defrauding a bank of nearly $460,000.

After a 13-day trial, a jury found Marvin Peugh guilty of filing a false loan application and four counts of check kiting. He will be sentenced March 19; he faces up to 30 years in prison and a fine of up to $1 million, plus restitution.

Peugh’s associate, Steven Hollewell, 63, of Lanark, pleaded guilty to one count of bank fraud in March. He will be sentenced Jan. 13 and faces the same penalty.

According to the federal indictment:

Peugh was president of Grainary Inc., which operated from Lanark. The company bought, sold, dried and stored grain. Hollewell was its secretary.

The two also were officers, shareholders and directors of Agri-Tech Inc., an Illinois corporation that dealt with custom farming services. The two ran the day-to-day operations of both companies.

Between January 1999 and August 2000, Peugh and Hollewell obtained loans from State Bank, in Freeport, and State Bank of Davis by creating fraudulent and misleading contracts for Agri-Tech to deliver and sell bushels of grain it produced to the Grainary, when in fact, Agri-Tech did not own or lease any land or receive grain from any land on which it operated.

The two men also wrote a series of checks to themselves, the Grainary, and other companies on several bank accounts that did not have sufficient funds to cover the checks, a practice called check-kiting.

By making series of deposits using the worthless checks, they were able to inflate the apparent balances in their accounts, then cash checks on those accounts at the banks.

In all, the two were able to withdraw $460,000, according to the federal indictment.