Archive for Tuesday, April 25, 2006

Wittig and Weidner get new sentences in bank fraud case

April 25, 2006


— A federal judge on Monday increased former Westar Energy Inc. Chief Executive David Wittig's prison sentence on bank fraud charges, partly because of his conviction last year for looting the Topeka-based utility.

U.S. District Judge Julie Robinson sentenced Wittig to 60 months, or five years, in prison for his part in covering up an illegal $1.5 million bank loan. He had received a sentence of 51 months before a federal appeals court in February determined Robinson erred when she calculated the amount of loss in the case and required that he and a co-defendant be resentenced.

That co-defendant, former Capital City Bank President Clinton Odell Weidner II, also received a five-year sentence Monday, a decrease from the six-and-a-half years Robinson had sentenced him to in 2004.

It's a largely academic sentence for Wittig, who was sentenced on April 3 to 18 years in prison after his conviction for looting Westar during his tenure. Robinson said the bank fraud sentence will run concurrently with his looting sentence.

Wittig's defense attorney, Steven Reiss, declined to comment, and Weidner's attorney, Bruce Simon, said he would need to talk with his client to see if he wanted to appeal. Weidner already has served two years of his sentence.

In July 2003, a Kansas City, Kan., jury found the two men guilty of a scheme in which Weidner agreed to increase Wittig's $3.5 million line of credit at his Topeka bank and, in return, Wittig lent the money to Weidner so he could invest in a real estate deal in Scottsdale, Ariz. The men then failed to disclose the loan to bank and regulatory officials.

Wittig was convicted of conspiracy, bank fraud and money laundering. Weidner pleaded guilty to two of six counts against him on the opening day of the trial, and jurors eventually convicted him of the remaining four counts.

The case has no connection with Wittig's looting case, in which prosecutors accused him and a co-defendant of engaging in a number of schemes to increase their compensation and benefits and then hide them from shareholders and regulatory officials.

But Robinson said she increased Wittig's sentence partly because evidence presented in the looting case showed Wittig was using the loan to get Weidner's help in arranging financing through the bank for Westar executives wanting to invest in a proposed spinoff of Westar's unregulated businesses.

That spinoff, which was later stopped by Kansas regulators, was a central part of the looting scheme, prosecutors said.

Robinson also rejected arguments from both defense teams that she couldn't calculate their clients' sentences as if both had benefited equally from the $1.5 million. She said Weidner benefited by using it to buy into the real estate investment while Wittig used it to increase his line of credit and charge Weidner interest on the loan.

In the looting case, jurors convicted Wittig of 39 counts, including conspiracy, wire fraud, money laundering and circumventing internal controls.

Former Westar chief strategy officer Douglas Lake was convicted of 30 counts and acquitted of nine. He was sentenced to 15 years.


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