Michael Schlager, former vice president of Equipment Finance LLC, was sentenced to 20 years in prison for his role in a $53 million fraud at the Sterling Financial Corp. unit, U.S. prosecutors said.
A federal judge in Philadelphia today also ordered Schlager to pay the total fraud amount in restitution, according to prosecutors. Joseph Braas, Equipment Finance’s former chief operating officer, was sentenced to 15 years in prison for his role in the scheme, prosecutors said yesterday.
Schlager and Braas led a conspiracy that lasted from 2001 through 2007, according to a statement from the office of Zane Memeger, the U.S. attorney in Philadelphia. The men hid losses and defaults in the unit’s commercial loan portfolio by creating fictitious loans and falsifying records, prosecutors said.
Discovery of the plot led Sterling to restate financial results from 2004 to 2006. The company sold itself to PNC Financial Services Group Inc. (PNC) in April 2008.
The case is U.S. v. Braas, 10-753, U.S. District Court, Eastern District of Pennsylvania (Philadelphia).
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