Magazine article American Banker

Grand Jury Indicts Jake Butcher for Bank Fraud: Two Associates Also Charged in Alleged Conspiracy to Misapply Funds in Tennessee

Magazine article American Banker

Grand Jury Indicts Jake Butcher for Bank Fraud: Two Associates Also Charged in Alleged Conspiracy to Misapply Funds in Tennessee

Article excerpt

KNOXVILLE, Tenn. -- Jake Butcher, the high-living financier who with his brother once presided over a $3 billion banking empire, was indicted Tuesday on charges of conspiracy, bank fraud, and misapplication of bank funds stemming from the collapse of that empire.

The grand jury investigating the failure of the Butcher banks also indicted Jesse Barr, a long-time Butcher associate, and Jack H. Patrick, former group vice president in the real estate department of the United American Bank of Knoxville.

A 32-count indictment charges that the three defendants were involved in a conspiracy from May 1, 1981, until April 30, 1983, to misapply in excess of $7 million from UAB-Knoxville, United Bank of Chattanooga, and United American Bank of Hamilton County. Mr. Butcher, Mr. Barr, and Mr. Patrick were each charged with 17 counts of bank fraud, 14 counts of making false entries in bank records, and one count of conspiracy.

According to the indictment, the three men conspired to lend money to Natural Energy Mining Inc. without disclosing that Jake Butcher had an ownership interest in the company. The indictment also said they pumped money into the company by obtaining loans from UAB-Knoxville in the names of two "fictitious" companies, Tri State Mining and Tri-State Mining Co. Inc.

A separate 12-count indictment charges Mr. Butcher and Mr. Barr with six counts of bank fraud and six counts of making false entries in bank records. The men allegedly misapplied the proceeds of several loans and falsified records related to those loans from the three banks.

The three men could receive up to five years in prison and $10,000 fines if convicted of the conspiracy charges and up to five years in prison and $5,000 fines on each of the other counts in the indictments. …

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