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HELENA, Mont. -- Three months after Helena businessman Steve Visocan pleaded guilty to federal bank fraud charges, Mountain West Bank has filed a lawsuit claiming he owes the bank about $1.5 million for unpaid loans. With interest on the loans accruing daily, the bank is requesting that property owned by Visocan, including his three-store Pop Inn chain, and a liquor license, be sold at sheriff's auction with the proceeds first flowing to the amount owed to Mountain West Bank.
A date has not been set for a hearing on the matter.
Visocan, who was scheduled to be sentenced yesterday stemming from his July guilty plea to a check kiting scam, had his sentencing pushed back to Oct. 23, CSNews Online has learned.
According to the latest lawsuit, Visocan secured two loans through the bank in 1998. The first was about $1.2 million -- an amount Visocan has paid down to about $50,000, not including interest and late charges, court documents indicate. The second loan was for about $1.5 million. A balance of $1.4 million, not including interest and late charges, allegedly remains due.
Court documents indicate that Visocan offered one of his properties, the assets of the Pop Inn and the liquor license attached to SteveV's Casino, as security for the loan. Also named as respondents in the lawsuit are Visocan Petroleum Co., Roseth Oil Co., the Internal Revenue Service and the Montana Department of Revenue ? other entities that might believe they have a claim on the property the bank wants to go to auction.
The document indicates that the IRS and the Montana Department Revenue have both filed claims against Visocan. However, Mountain West Bank asserts that Visocan owed the bank money first, and thus, the amount owed to it should be paid first from the proceeds of the sheriff's auction. It will be up to a judge to decide whose claims against Visocan are legitimate, in what order those claims should be paid from the profits of the sheriff's action, and if, in fact, such an auction should be held.
According to federal prosecutors, the case against Visocan began two years ago when First Interstate Bank in Great Falls received a returned check for $584,000 drawn on a Visocan Petroleum Company account at Mountain West Bank in Helena. The following day, First Interstate Bank received a second returned check for $577,000 from Mountain West Bank also drawn on the Visocan account.
The operations officer for Mountain West Bank subsequently identified the checks as part of a check kiting scheme after she discovered that Visocan's account was overdrawn by about half a million dollars. Check kiting generally involves using checks to create multiple bank accounts, without the money to cover the checks. Typically a check is written from an account with insufficient funds, and that check is deposited to a second account, which is often at a different bank, prosecutors explained.
The deposit at the second bank is made with the hope that the amount of the check deposited will be credited to the account in the second bank before notification from the first bank that the funds are insufficient. To ensure that the first bank doesn't see there are insufficient funds available, a check also is written against the account at the second bank and simultaneously deposited to the account at the first bank.
The purpose of all this check writing is to create the impression that there are funds in the accounts, when there actually isn't enough to cover them. The size of the fraudulent insufficient funds checks typically increases over time so as to cover the total amount of all checks.
Visocan's legal troubles came to light just four days after telling the convenience store and petroleum marketing industry that he was resigning his position as treasurer and chairman-elect of the National Association of Convenience Stores (NACS). Hank Armour is serving his second consecutive year as chairman in Visocan's place.