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Former Developer John Kroh Found Guilty of Bank Fraud

September 30, 1988

KANSAS CITY, Mo. (AP) _ A former millionaire real estate developer, described by his lawyer as a ″man of the highest integrity,″ has been found guilty of defrauding banks to keep his failing company afloat.

John A. Kroh Jr., 47, remained impassive as the jury delivered the verdict Thursday after five hours of deliberations. He would not comment afterward.

Kroh’s corporation, Kroh Brothers Development Co., was one of Kansas City’s most successful development companies, responsible for nearly 170 shopping centers, residential areas and office buildings in 13 states. In early 1986 the company was valued at nearly $70 million, but it went into bankruptcy in February 1987. Kroh also declared personal bankruptcy.

Kroh was found guilty of 13 counts of conspiracy, bank fraud, wire fraud, receiving stolen money and forging his wife’s name on loan application papers.

U.S. District Judge John Whipple said he would set a sentencing date within 30 days, after receiving a pre-sentence report. Kroh’s lawyers said they would decide by then whether to appeal.

Kroh could receive a maximum sentence of more than 80 years in prison and a $3.25 million fine.

His lead attorney, Darrell McGowen of Chicago, said Kroh was ″a decent, caring human being.″

″Whether he may stand at this particular moment guilty, there is a difference between legal and moral guilt,″ McGowen said. ″And he is not morally guilty of the charges.″

No family members were in the courtroom when the verdict was read, including George P. Kroh, 50, who had testified against his brother as part of an earlier plea bargain.

George Kroh, a co-owner of the firm, served two months of a three-year sentence this summer after pleading guilty to fraud and conspiracy.

The government charged that the development company started to go downhill in 1986, under the weight of more than $750 million in loans and investment financing arrangements that became complicated by the 1986 tax changes.

Prosecutors said John Kroh falsified financial statements to banks in late 1986 in order to obtain personal loans.

Kroh maintained he never tried to deceive the banks. He said he had delegated responsibility for filling out the financial statements to employees.