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Three Indicted in Bank Scam Enter Innocent Pleas

March 17, 1987

CHICAGO (AP) _ A former Penn Square Bank vice president and two other men have pleaded innocent to a new round of charges that they schemed to defraud the Continental Illinois National Bank & Trust Co.

The pleas were entered Monday by William B. Patterson, a former Penn Square vice president; Jere Sturgis a Tulsa, Okla., oil producer; and John Lytle, a former Continental Illinois vice president, during a brief appearance before U.S. District Judge Milton Shadur.

The indictments, disclosed March 4, charge all three men with multiple counts of wire fraud. It is the third time since 1984 they have been charged in connection with the bank collapse.

Patterson, who two years earlier was acquitted of federal charges resulting from the collapse of Penn Square, and Lytle also were named in additional counts of misapplication of bank funds.

Shadur denied a motion Monday by Patterson’s attorney, who argued that charges against Patterson should be dropped because of his previous acquittal. Shadur said there were two distinct conspiracies against the banks and ruled that each should be tried separately.

Shadur is expected to rule by April 2 on a motion to dismiss the eight counts against Lytle who argued that the government waited too long to bring its charges. Sturgis, who was not represented by a lawyer during the hearing, joined Lytle’s motion and Patterson was expected to, said Tom Buchele, Shadur’s law clerk.

Shadur twice previously dimissed the case against the three men because of technical errors. But in both instances, he did so ″without prejudice,″ enabling prosecutors to seek new indictments from a federal grand jury.

The latest round of indictments charge the three took part in a scheme in which Lytle made improper loans at Continental and in return received a $585,000 kickback from Penn Square.

The Oklahoma bank collapsed in July 1982, and Continental came to the brink of collapse two years later.

The federal government, which rescued Continental with a $4.5 billion safety net, has said the Chicago bank participated with Penn Square in more than $1 billion in energy loans.

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