Ex-Pinehurst Bank chief gets prison for scam role

John Markert, the former president of Pinehurst Bank in St. Paul, was sentenced Friday to 3 1/2 years in prison for misapplying the bank's funds to cover up a customer's $1.85million in anticipated overdrafts.

The sentence was less than half the prison time government prosecutors had been seeking. U.S. District Judge Ann Montgomery in Minneapolis said she lessened the sentence due to Markert's age, fragile health and the "exemplary life" he has led, including his record of community service and philanthropy. The terms include two years of supervised release, but don't include a fine or restitution.

Markert, 58, of Mendota Heights, was convicted in April of five counts of misapplying the bank's funds to cover a check-kiting scheme of bank customer George Wintz Jr. The scheme involved getting five straw borrowers to take $1.9 million in loans from Pinehurst to cover for Wintz's bad checks.

Wintz, a 72-year-old Minneapolis businessman who has owned various warehouse and trucking companies, had been sentenced a day earlier. He was convicted of two counts of bank fraud and one count of embezzlement for taking at least $160,000 from an employee retirement plan at one of his companies. Wintz, too, was sentenced to 3 1/2 years in prison.

A third defendant, Gregory Pederson, 44, of Roseville, was acquitted in April.

Because of his medical condition, Markert will likely be placed in a facility where he has access to special care, Montgomery said.

Markert sat stoically throughout the proceeding, the gallery behind him filled with friends and family. Before the judge delivered her final sentence, Markert's lawyer, Joe Friedberg, argued that Markert's motive was "pretty pure. ... It was to save the bank."

"At worst it's a temporary lapse of judgment," Friedberg said.

Prosecutors, however, had sought a 10-year prison sentence, arguing that Markert jeopardized the soundness of the bank, violated a position of trust and should be held accountable for the losses. The check-kiting scheme couldn't have worked without him, they said.

An investor in the failed St. Paul bank told the court before the sentencing that he lost a lot of money in Pinehurst, forcing him to delay his retirement and keep working. "This has affected numerous people," he said of other shareholders. "They're devastated."

Except for appeals -- Friedberg said he intends to appeal the case -- Markert's sentencing wraps up the Pinehurst chapter of Minnesota bank failures during the recent financial crisis.

The small bank, whose sole branch was in St. Paul's Highland Park neighborhood, was only about three years old when Markert joined as president in 2007. Markert brought along with him his longtime customer Wintz, who began writing checks between various business accounts at Pinehurst and North Star Bank in Roseville.

The scheme contributed to the bank's demise. State regulators closed Pinehurst in 2010 and the Federal Deposit Insurance Corp. took it over, selling it to Coulee Bank of La Crosse, Wis. Coulee moved the branch to Grand Avenue in St. Paul.

Jennifer Bjorhus • 612-673-4683