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Archive for Saturday, February 28, 2004

Wittig gets four-year sentence for loan conspiracy

Judge gives former Westar CEO lighter prison term

February 28, 2004

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— Former Westar Energy Inc. chief executive David Wittig was sentenced Friday to more than four years in prison for his part in a federal loan-conspiracy case stemming from two transactions at a Topeka bank.

Wittig was found guilty July 14 of conspiracy, four counts of making false bank entries and one count of money laundering. The charges alleged no wrongdoing at Westar or any harm to the electric utility or its shareholders.

His co-defendant, former banker Clinton Odell Weidner II, was sentenced Thursday to 6 1/2 years in prison in the same scheme.

U.S. District Judge Julie Robinson sentenced Wittig to four years and three months in prison on each count; the sentences will run concurrently. The judge also fined Wittig $1 million, and ordered him to spend three years on supervised release after completing his prison term.

Robinson did not order Wittig taken into custody Friday; he will be allowed to voluntarily surrender to federal authorities. The judge also declined to immediately rule on a request from Wittig's attorney that he be allowed to remain free on bond pending an appeal of his conviction.

Wittig declined an opportunity to make a statement before he was sentenced. He also refused to speak with reporters as he left the courthouse.

Before pronouncing sentence, Robinson said she had received several letters from Wittig's friends and family that indicated he had made considerable charitable contributions to the Topeka area and had been a devoted husband and father to his two sons.

She said she took those letters into consideration when deciding to sentence Wittig to the low end of federal sentencing guidelines for such cases. He could have been sentenced to up to five years and three months in prison.

Loan scheme

David Wittig, former Westar Energy Inc. chief executive, heads into
the federal courthouse in Kansas City, Kan., with his wife, Beth.
Wittig was sentenced in a federal loan-conspiracy case to more than
four years in prison, a $1 million fine and three years on
supervised release after his prison term.

David Wittig, former Westar Energy Inc. chief executive, heads into the federal courthouse in Kansas City, Kan., with his wife, Beth. Wittig was sentenced in a federal loan-conspiracy case to more than four years in prison, a $1 million fine and three years on supervised release after his prison term.

Weidner was president of Topeka's Capital City Bank, where he served as Wittig's personal loan officer. The case involved two transactions in April 2001 at the bank.

Weidner approved a $1.5 million increase in Wittig's personal line of credit at the bank so Wittig could lend the money to Weidner for a real estate investment in Scottsdale, Ariz. The government said Wittig loaned Weidner the $1.5 million in return for his help in making $20 million worth of bank loans available to Westar executives.

Wittig and other executives planned to use the loans, which were never made, to buy stock in a proposed Westar spin-off, which regulators blocked.

Prosecutors said the scheme worked this way: First, Wittig's personal credit line was increased -- at his request and on Weidner's recommendation -- by $1.5 million. Hours later, $1.5 million was transferred from Wittig's account directly into a real estate project in which Weidner was investing near Scottsdale, Ariz.

While hearing arguments on several motions before Friday's sentencing, Robinson rejected defense attorney Jeff Morris' claim that Weidner was to blame for the scheme and Wittig did not profit from it. Robinson said Wittig may have been less culpable than Weidner but "this was a two-man conspiracy."

On Thursday, Robinson ruled that Weidner must forfeit all proceeds from the land deal. The loan from Capital City Bank has been repaid.






At the request of Wittig's attorney, Robinson agreed to recommend Wittig serve his sentence at the federal prison camp in Allenwood, Pa. The federal Bureau of Prisons usually follows such recommendations.

Separate trial looms

Meanwhile, Wittig faces a separate 40-count federal indictment accusing him and former Westar executive vice president Douglas Lake of committing conspiracy, fraud and other crimes. Prosecutors allege Wittig and Lake tried to loot Westar, the state's largest electric utility.

Each man is charged with 39 felonies -- one count of conspiracy, 14 counts of circumventing corporate controls, eight counts of wire fraud, 10 counts of providing false statements to government agencies and six counts of money laundering. A 40th count seeks to have them forfeit assets to the government.

Trial in that case is scheduled to begin Sept. 7.

Wittig and Lake are also in arbitration with Westar over their former employment contracts. Wittig claims he is owed $110 million and Lake claims $70 million.

In his claim, Wittig said Westar Energy "spins a fanciful tale" of misconduct as part of an effort to bolster its stock price and deflect scrutiny of the company. Wittig said Westar had tried to make him a "convenient scapegoat" for problems faced by the company.

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