MORE SENIOR FRAUD: ‘Insider Lending’ Scam: Illinois Man, 82, Pleads Guilty To Duping Bank He Once Led; Bank Later Failed

In what federal prosecutors described as an “insider lending” scam, the 82-year-old former chairman of a bank that failed in 2011 has pleaded guilty to duping the bank and regulators by concealing his interests in loans made by the bank to his secret business associates.

James A. Regas, of Oak Brook, caused employees of Western Springs National Bank & Trust to make false financial reports to the FDIC and “admitted that he falsified and concealed material facts that should have been fully disclosed to the bank’s directors and government regulators during 2008 and 2009,” federal prosecutors said.

Meanwhile, Regas signed reports to the FDIC “knowing they contained false information regarding the delinquency status of certain loans” prosecutors said.

All in all, the bank lost about $681,000 on loans in which Regas had an undisclosed interest. Each of the loans went to business associates of Regas and, in one case, Regas received about half of the proceeds of a $500,000 loan “indirectly through a third-party,” prosecutors said.

In another case, an $803,000 loan was used to partially finance the acquisition of three properties “in which Regas and family members had financial interests.” In a third case, a $750,000 loan was made to a real-estate investor who used the proceeds to purchase an apartment building from Regas.

“That building served as collateral for the bank on another loan that Regas acquired and sold through a nominee company,” prosecutors said. “These loans enabled Regas to use bank funds for his own benefit without having to apply for loans himself, posting collateral or signing any promises to repay the bank’s money, while evading federal restrictions on insider loans.”

“Regas knowingly submitted false conflict-of-interest statements to the bank, in which he denied having any financial relationship with any of the bank’s borrowers,” prosecutors said.

He faces up to five years in federal prison and a restitution order. Sentencing is set for Oct. 25.