Gregory A. White, United States Attorney for the Northern District of Ohio, announced that David F. Verhotz was sentenced today by U.S. District Judge John R. Adams in Akron, Ohio. Verhotz was sentenced to 97 months incarceration followed by 5 years supervised release. Verhotz was also order to make restitution of approximately $18.6 million to Key Bank.

David F. Verhotz, age 57, last resided at 1278 West Ninth Street, Cleveland, Ohio. Verhotz has been held in Pretrial Detention since he was arrested by FBI agents at Cleveland Hopkins Airport on November 11, 2006. Verhotz was charged with bank fraud through an information filed on December 1, 2006, and he pled guilty to that offense on January 25, 2007.

The information alleged that Verhotz was employed by Key Bank as Senior Vice President for Global Treasury Management. The information further alleged that Verhotz’s responsibilities included requesting, approving, and underwriting trade advance loans for international banking customers. The information charged that, from October 15, 1997, through November 8, 2006, Verhotz fraudulently obtained about 106 loans totaling approximately $40.6 million in the names of several foreign banks and an international trade company.

The information alleged that Verhotz concealed his fraudulent scheme by creating fictitious names purportedly as representatives of these foreign entities, who would request trade advance loans from Key Bank. The information stated that Verhotz used a portion of the loan proceeds to repay existing loans in order to conceal and continue his fraudulent scheme. It was further alleged that Verhotz used a substantial portion of these loan proceeds for various personal acquisitions, including a $5.6 million home in Sagaponack, New York; about $2.7 million toward the purchase of a condominium on Park Avenue in New York City; and more than $2 million in jewelry purchases. As part of his sentence, Verhotz was ordered to forfeit these assets.

The information further alleged that Verhotz fraudulently obtained 29 loans totaling approximately $18.6 million in the names of three foreign banks during 2006 and all of these loans remain unpaid and outstanding. Consequently, Key Bank sustained a loss of about $18.6 million.

This case was prosecuted by Assistant United States Attorneys John D. Sammon and Justin J. Roberts, following an investigation by the Cleveland office of the Federal Bureau of Investigation.