ROCKFORD – A former Sterling bank manager will serve 2 years, 4 months in federal prison for taking more than $1.1 million in kickbacks while he worked at three Whiteside County banks.
According to court records, Lyle J. Spaulding, 45, who pleaded guilty to bank fraud on April 2 and was sentenced Friday, also must pay more than $1 million in restitution to the three banks and a $1,000 fine. He will be on 3 years of supervised release once his sentence is served.
The former YMCA board president and Sterling Today Inc. board member was senior vice president of commercial lending at Freedom Bank in Sterling and Rock Falls from December 2007 to December 2009; vice president and senior commercial relationship manager at UnionBank (now Peoples National Bank of Kewanee) in Tampico from March 2006 to December 2007; and vice president at Amcore (now BMO Harris) in Sterling from March to December 2005.
During that time, he:
– Approved loans and loan increases for family members without disclosing his relationship to the banks.
– Approved loans and loan increases in which the borrowers agreed to pay part of the loan proceeds back to Spaulding, without disclosing that to the banks.
– Mischaracterized transactions as “commercial loans,” which allowed him to approve higher amounts than he otherwise could have authorized.
The restitution will be paid to Freedom Bank, Peoples National Bank of Kewanee, BMO Harris Bank, and Travelers Insurance.
Spaulding will self-report to prison on Oct. 7. The facility has not been determined.