Tucson CitizenTucson Citizen

Getting a new start


A Phoenix developer is given probation after his conviction in a check-kiting scheme.

PHOENIX – During the 1980s, developer Conley D. Wolfswinkel became one of the area’s most prominent developers, only to come crashing down with the collapse of the real estate market.

He said now he can begin anew after being sentenced yesterday to five years’ probation and being fined $75,000 in a check-kiting scheme.

“It gives us a fresh start to being honoring some of our obligations,’ the 44-year-old Wolfswinkel said after being congratulated by friends.

He had faced up to 45 years in prison and millions in fines.

Wolfswinkel was ordered last year in a civil case – along with Charles Keating Jr. – to pay nearly $1 billion to bondholders of Lincoln Savings and Loan, although Wolfswinkel said he believed a settlement will lower that amount. He said he believes he can clear off his debts within five years.

Defense attorney Gary Kohlman pointed up his client’s ability to acquire income. Government attorneys said that was good reason for a large fine.

“He says, `Fine me. Fine me a substantial amount,’ ‘ said Wayne Williams, a Justice Department attorney. “But money is like Monopoly to Mr. Wolfswinkel. The fine should not be in lieu of incarceration.’

U.S. District Judge Roger Strand said he disagreed with the defense contention that this was a no-loss case. “There were many losses,’ the judge.

However, he added, “this was a check-kiting case that was unusual because, after all, the activity ceased, the money was paid in full.’

Williams declined comment after the sentencing.

Wolfswinkel was convicted July 21 of bank fraud, conspiracy and seven counts of misappropriation of bank funds. He was accused of floating millions of dollars of checks during 1986, although all the money involved ultimately was made good.

Wolfswinkel and his company, WGI Inc., are in bankruptcy.

Strand noted the banks that were defrauded in the case hadn’t brought legal action against Wolfswinkel. Only United Bank, which was later bought by Citibank, got the developer to pay $15,000 in interest on what was labeled “unauthorized loans,’ checks that weren’t covered with sufficient funds.

Williams had argued before the sentence that Wolfswinkel should get the maximum five years in prison for each of the nine felony counts. He also said fines of up to $8.2 million were appropriate.

Wolfswinkel was one of several defendants, along with Keating, convicted in the bondholders trial in Tucson last year. Wolfswinkel had been accused of being a “straw buyer’ for Keating. Wolfswinkel and his company had received $150 million in loans from Lincoln.

Wolfswinkel was convicted in July of conspiring with former United Bank Vice President John O’Neill to defraud banks. O’Neill pleaded guilty to two felony counts and testified at Wolfswinkel’s seven-week trial.

O’Neill was sentenced yesterday to five years probation and fined $5,000.

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