ROCKFORD – A Milledgeville man was sentenced Tuesday to 5 years, 10 months in federal prison and ordered to pay $2 million in restitution for defrauding a bank of $460,000.
Marvin Peugh, 56, was convicted of filing a false loan application and four counts of check kiting. The verdict followed a 13-day trial in December.
Peugh must turn himself in to federal officers June 12 to begin serving his sentence.
His co-defendant, Steven Hollewell, 63, of Lanark, was sentenced in February to a year in federal prison on one count of bank fraud and was ordered to pay back more than $3 million in restitution.
He is being held in Duluth, Minn.
Peugh was president of Grainary Inc., which operated from Lanark. The company bought, sold, dried and stored grain. Hollewell was its secretary.
Between January 1999 and August 2000, the two men obtained loans from State Bank in Freeport, and State Bank of Davis by creating fraudulent contracts. The contracts said Agri-Tech would deliver and sell bushels of grain it produced to Grainary, but Agri-Tech didn’t own or lease any land or get grain from any land on which it operated.
The two also wrote a series of checks to themselves, 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 a series of deposits using the worthless checks, they were able to inflate the apparent balances in their accounts, then cash checks at the banks.
In all, they withdrew $460,000.