DENVER—Bankruptcy records show the failed New Frontier Bank in Greeley financed about $9.6 million in loans for business deals of a former director who later was convicted of theft in a mortgage scheme.
A bankruptcy court filing in March by former director Dean Juhl shows he got at least five loans from the bank, and the mostly unsecured notes were still on the books when the bank was shut down by regulators in April, The Denver Post reported Wednesday.
Regulators had accused the bank of unsound practices in December.
Juhl, 63, resigned from the bank’s board in March 2007.
Juhl had $50 million in debt to various creditors including New Frontier while he helped run or invested in several companies, including a Deals on Wheels car enterprise and JS Real Estate.
Colorado law does not bar banks from making loans to felons or limit borrowing for former directors, but bank boards must closely monitor loans to its executives.
Two of the loans Juhl documented were for a total of $2.8 million in August 2008, six months after he was convicted of theft in Weld County connected to a mortgage scheme operated through JS Real Estate, The Denver Post reported.
Authorities allege Juhl and business partner Mark Strodtman induced cash-strapped homebuyers to purchase homes, then kept the mortgage money, leaving clients facing foreclosure.
Juhl, who served a month in jail, declined to comment. Strodtman was captured in Mexico and faces a November trial on theft, forgery and racketeering charges. A phone number for Strodtman couldn’t be found.
Former New Frontier President Larry Seastrom said the bank had provided properly vetted loans to JS Real Estate before any fraudulent activities were exposed.
Seastrom said he believes that last August the bank refinanced existing loans for Juhl without providing “fresh” money.
He said the deal would have required collateral, but Seastrom didn’t have any documentation of what assets backed it.
Colorado Banking Commissioner Fred Joseph said any direct business loans to Juhl in August “would give me pause” and should be investigated, The Post reported.
Records show that Federal Deposit Insurance Corp. attorneys have entered Juhl’s bankruptcy proceedings to try to recover as much money as possible from Juhl, The Denver Post reported.
Juhl also faces civil lawsuits filed by people who say they were victims of his real estate dealings.
