Kenosha man had brief stint at Fox River State Bank
By Ed Nadolski
Editor in Chief
A former loan officer at Fox River State Bank, Burlington, has been sentenced to 35 months in prison for originating fraudulent loans of more than $1.45 million at the Burlington bank and a credit union in Illinois.
James Scalzo, 46, of Kenosha, was also ordered by federal Judge Lynn Adelman on July 18 to serve three years supervised release following his prison term, according to information supplied by the U.S. Attorney’s office in Milwaukee.
Restitution will be determined at a later date, the attorney’s office said.
According to federal court records, Scalzo pleaded guilty in January to bank fraud and money laundering charges in an agreement with the U.S. Attorney’s office. Records indicate he reached a plea deal with the federal authorities a month earlier following an investigation conducted by the FBI and other federal agencies.
Keith Pollek, president and CEO of Fox River State Bank, said the scheme did have a financial impact on the bank, but it has long since been mitigated and has had no lingering impact on the bank’s customers or its operation.
“We dealt with it in previous years,” said Pollek, who was not with Fox River when the fraud occurred. “(The management and the board) set up reserves and took care of it immediately.”
Pollek said Scalzo was employed by the Burlington-based bank for just six months.
According to the U.S. Attorney’s office:
• Between April 1, 2008, and Oct. 31, 2009, while employed as an officer at Fox River and then later at Consumer’s Credit Union in Round Lake Beach, Ill., Scalzo originated and approved multiple fraudulent loans by forging the names of unwitting borrowers on the loan documents.
• Scalzo then directed funds be taken from the loans and transferred by cashier’s check or wire, to accounts in which he had a personal interest. Some of the funds were applied against earlier loans in order to conceal the fraud.
According to the criminal complaint, Scalzo originated six fraudulent loans totaling $843,000 at Fox River and three fraudulent loans totaling $615,000 at Consumer Credit Union.
The U.S. Attorney’s office said the case involved not only an abuse of the trust of the financial institutions that employed Scalzo, but also caused personal and financial hardship to unknowing victims whose names appeared on the loan documents.
Among the victims was a couple whose home Scalzo had pledged as collateral for one of the fraudulent loans and then allowed to go into foreclosure.
While the federal complaint only identified the victims by initials, the Kenosha News reported in January that some of Scalzo’s relatives were unwittingly used as part of the scheme. Three of the loans were reportedly taken out by Scalzo in his cousin’s name, without the approval of his cousin.
According to the Kenosha News story, Scalzo later obtained a line of credit at the Bank of Mukwonago – to help pay off the previous loans – by forging his mother’s name and the name of her late husband’s business partner. Scalzo reportedly pledged property they owned as collateral.
Scalzo faced a sentence of up to 30 years for the bank fraud offense and 20 years for the money laundering count, but prosecutors recommended that he receive maximum reduction under sentencing guidelines in exchange for his guilty plea.
The case was handled by federal authorities because the financial institutions involved are federally insured.
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